Indian government has denied any misconduct and accuses opposition Congress party of undermining national security to win votes Reliance insists it settled any tax disputes it had in France and did not benefit from ‘favouritism’ French Rafale fighter aircrafts. File photo: AFP France waived millions of euros in taxes for a company owned by an Indian businessman four years ago as the two countries were negotiating a military jet deal, French newspaper reported on Saturday. New Delhi agreed in 2016 to purchase 36 Rafale jets from France but the deal has been embroiled in misconduct allegations, with the latest report coming just days after the start of India’s massive election. A French Navy Rafale fighter jet. File photo: EPA According to , taxes worth a total of 143.7 million (US$163 million) were waived in 2015 in a settlement in favour of a French firm owned by Indian billionaire Anil Ambani’s Reliance Group conglomerate. Reliance insisted it did not benefit from “favouritism”. “Reliance denies any favouritism or gain from the settlement,” it said in the statement. “Reliance Flag settled tax disputes as per legal framework in France available to all companies operating in France.” The French embassy in New Delhi also said the settlement had been enacted “in full respect of the legal and regulatory framework” and was free of “any political interference”. French company Dassault initially won a contract negotiated in 2012 to supply 126 jets, with 18 built in France and the rest in India by state-owned Hindustan Aeronautics. But during a visit to France in 2015, Modi scrapped the deal, replacing it with an order for 36 jets – all to be built in France. The new agreement, formally signed in 2016, named Reliance group as Dassault’s local partner. Ambani is reported to be close to the governing party and Reliance had little experience in the aviation sector. Rafale jet fighters flying near Toulon, France in November 2018. Photo: Reuters The government has strongly denied any misconduct in its renegotiation of the deal and accuses opposition Congress party of undermining national security to win votes. India’s Ministry of Defence said on Saturday the report was drawing a conjectural connection between the tax relief and the jet deal. “Neither the period of the tax concession nor the subject matter of the concession relate even remotely to the Rafale procurement concluded during the tenure of the present government,” the ministry said in a statement. “Any connections drawn between the tax issue and the Rafale matter is totally inaccurate, tendentious and is a mischievous attempt to disinform.” Alexandre Ziegler, France’s ambassador to India, said a global settlement was reached between French authorities and Reliance FLAG in a tax dispute. “This settlement was conducted in full adherence with the legislative and regulatory framework governing this common practice of the tax administration,” he said on Twitter late on Saturday. “It was not subject to any political interference whatsoever.” India’s main opposition Congress Party has for months accused Modi of corruption in choosing Reliance Defence as a domestic partner in the deal to buy 36 Rafale planes from France’s Dassault Aviation. The party has made it a major issue in India’s election. Indian Youth Congress activists protesting alleged corrupt practices over the Rafale jets deal during a rally against Modi’s BJP-led government in New Delhi in August 2018. Photo: EPA The allegations have repeatedly been denied by Modi and Mumbai-based Reliance. Reliance said in its statement on that Reliance FLAG, which runs a cable network and telecoms infrastructure business in France, agreed with French authorities to pay 560 million rupees (US$8 million) as tax for 2008 to 2012 instead of the initial demand of 11 billion rupees. It said during that period Reliance FLAG business had an operating loss of 2.7 million. India’s Supreme Court said this week it would hear a request for an investigation into the jet deal. Under India’s defence procurement rules, any company selling equipment must invest at least 30 per cent of the contract in India as part of an “offset” clause to help build a domestic manufacturing base and reduce the country’s dependence on imports. Dassault has said it picked Reliance Defence as a partner on its own. Agence France-Presse, Reuters

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