India's Modi faces calls for resignation over French jet deal

Hollande's comments on Friday stoked debate over a subject that has gained significant traction in India in recent weeks, since the opposition Congress party accused Prime Minister Narendra Modi of favouring a private conglomerate over a public company in the aircraft deal estimated to be worth $8.7 billion.

The party alleges Modi gave preferential treatment to industrialist Anil Ambani, the billionaire chairman of Reliance Group, to the detriment of Hindustan Aeronautics Limited (HAL), the state-run giant that has been producing planes for decades, most of them Russian under licence.

Officials in India and France say French manufacturer Dassault had freely chosen to partner with Reliance, despite Ambani having no previous experience in the aeronautics sector.

"We did not have a say in that," Hollande told investigative website Mediapart. "It was the Indian government that proposed this service group (Reliance), and Dassault who negotiated with Ambani. We did not have a choice, we took the interlocutor who was given to us."

Under Indian defence procurement rules, a foreign firm must invest at least 30 percent of the contract in India to help it build up its manufacturing base and wean off imports.

For that, the French firm picked Reliance and not Hindustan Aeronautics Limited.

"The PM personally negotiated and changed the Rafale deal behind closed doors. Thanks to François Hollande, we now know he personally delivered a deal worth billions of dollars to ... Anil Ambani," Rahul Gandhi, the president of the main opposition Congress party, said in a tweet. "The PM has betrayed India."

Modi, who stormed to power in 2014 promising to rid India of deep-seated corruption, had no "moral right" to remain in power after the revelations from Hollande, senior Congress leader Anand Sharma said.

Smaller parties also joined the attack on Modi who is already under pressure to shore up his political base ahead of a series of state elections this year followed by a national election in 2019.

Modi's office did not respond to a request for comment. The defence ministry said in a tweet that neither the French nor Indian government had had a say in the matter.

"The report referring to fmr French president Mr. Hollande's statement that GoI (government of India) insisted upon a particular firm as offset partner for the Dassault Aviation in Rafale is being verified.

"It is reiterated that neither GoI nor French Govt had any say in the commercial decision."

Reliance did not immediately respond to a request for comment. Dassault denied the report, saying it had picked Reliance as a partner for industrial reasons.

"This is Dassault Aviation's choice, as [Dassault] CEO Eric Trappier explained in an interview published in MINT newspaper on April 17," the company, which also makes Falcon business planes, said in a statement.

"Dassault Aviation and Reliance have built a plant in Nagpur for manufacturing parts for Falcon and Rafale aircraft. The Nagpur site was chosen because of the availability of land with direct access to an airport runway, an essential condition [for] aeronautic activities."

The deal with Dassault was expected to deepen strategic ties with France and the company itself has hoped it would lead to a larger order for combat jets that the Indian air force says it needs to face a perceived twin threat from China and Pakistan.

India picked the Rafale plane to replace its ageing fleet of Russian aircraft from a field that included Lockheed Martin's F-16, Saab's Gripen, the Eurofighter Typhoon, Boeing's F/A-18E/F Super Hornet and the Russian MiG-35.

(FRANCE 24 with REUTERS)