India, the world's largest arms importer, requires foreign defence companies to invest a percentage of the value of deals that they have been awarded into India to help the country build its own manufacturing base and wean itself off imports.
Dassault agreed to invest 50 percent in so-called offsets of the $8.7 billion deal it signed with New Delhi on Sept. 23 to supply 36 of its Rafale fighter jets. Reliance said the offset contract is India's biggest ever.
Billionaire Anil Ambani, whose Reliance has virtually no experience of defence manufacturing, hopes to turn his company into a major defence firm over the coming years.
The agreement with Dassault is a bet that Reliance can build manufacturing facilities at a site in the central Indian city of Nagpur to feed into Dassault's supply chain, or for future Indian government orders of the Rafale jet.
A person familiar with the agreement said part of the 300 billion rupees in offsets would be spent directly on Reliance manufactured products, and part would be spent through other Indian manufacturers, depending on which company could best carry out the work. The person was not authorised to speak to the media about the agreement and so declined to be identified.
"The formation of this Joint venture with Reliance Aerospace led by Anil Ambani's Reliance Group illustrates our strong commitment to establish ourselves in India and to develop strategic industrial partnerships under the 'Make in India' policy promoted by the Indian Government," Dassault Chief Executive Eric Trappier said in a statement.
Senior executives told Reuters in May that Reliance had bid for 840 billion rupees in government contracts, but was yet to win any.
Other Indian companies with an interest in defence and aerospace include Tata Group, Mahindra Group and Larsen & Toubro Ltd.
(Reporting by Tommy Wilkes; Editing by Sanjeev Miglani and Christopher Cushing)
