India-France Rafale deal reaches final stages

India-France Rafale deal reaches final stages

The negotiations reached the final stages in 36 Rafale jets deal between India and France

The Dollar Business Bureau 

The negotiations over the deal of 36 Rafale fighter jets between India and France is in its final stages, with the deal to be settled down at around Rs.65,000 crore ($9 billion), according to the sources from the Ministry of Defence. 

Both the countries were hopeful of closing the strategic deal during the visit of French President Francois Hollande to India in January, but things didn’t materialise over price negotiations. 

The development in the 36 Rafale combat jets deal came after the two countries managed to curtail off their differences over the matter of pricing. The sources from ministry said, “The deal is in the “final stages” yet. However, the final deal could be closed by May end, this year.” 

According to the government sources, the purchase for 36 Rafale jets, as per the UPA government’s tender, after taking into consideration the rising cost and rate of dollar, is nearing Rs.65,000 crore. This cost includes the charges to be incurred for making changes in the aircraft as per India’s requirements such as helmet-mounted display system and other weaponry. 

India has been discussing rigorously on bringing down the cost of the combat aircraft. "The government is trying hard to bring down the cost a little lower to 8 billion euros (Rs.59,000 crore)," the sources said. 

Under the current deal, quoted by the sources, France has agreed to deliver 50 percent offsets, thus helping to create business opportunities amounted to 3 billion euros for small companies in India and generating thousands of jobs, through the offsets. 

It has also been agreed upon that French companies, apart from Dassault, will give various technologies related to aeronautics, electronics and micro-electronics in compliance with the obligation of offset. 

Companies, such as Safran and Thales Group, will partner with Dassault in offering advanced technologies with regards to radar, stealth, thrust vectoring for missiles, and resources for electronics and micro-electronics. 

In 2007, India floated a tender to acquire 126 advanced combat aircrafts in order to enhance the country’s air force’s offensive capabilities. French firm Dassault Aviation, which manufactures Rafales, had emerged as the frontrunner and bagged the tender for providing 126 medium multi-role combat aircraft (MMRCA). However, after protracted negotiations, the deal made no progress, and India scrapped the tender. Instead, the country decided to buy 36 Rafales jets in a government-to-government contract from France.

The Dollar Business Bureau - Apr 16, 2016 12:00 IST