NEW DELHI and PARIS – India will fast-track the finalization of the US $12 billion plan to purchase 126 Dassault Rafale jets, according to a senior Indian Defence Ministry official, almost three years after India made Dassault its preferred bidder.
The news follows Monday evening talks between Indian Defence Minister Manohar Parrikar and his visiting French counterpart, Jean-Yves Le Drian.
"This morning we can say the negotiations are close to a conclusion," a French government official said on Tuesday. France and India wish to reach an agreement quickly and the two ministers decided to speed up the negotiations to resolve the last details, the official said.
Le Drian's schedule on Tuesday included visits to various defense industry sites, the official said.
French President François Hollande struck a cautious note when asked about the deal.
"It is always better to be cautious on contracts," he said, business daily Les Echos reported. "Work is being done, and when it is concluded, then we can talk."
The Indian MoD official refused to give details on how the two sides will resolve differences holding back the finalization of the negotiations in the run up to the inking of the contract. He did say that the two defense ministers agreed that all issues that are irritants will be sorted out by the end of this year so the deal can be finalized by the end of the Indian financial year on March 31.
The crucial issue that needs to be solved is the insistence by Hindustan Aeronautics Ltd. (HAL) to give guarantees on the delivery schedule of the Rafales that will be license-produced at HAL. Another issue relates to bringing down the cost of Indian-made Rafales.
A second MoD official said the sides are discussing what currency will be used to purchase the 18 aircraft built by Dassault in France, and how HAL could be protected against currency fluctuations. The details are not known, but the two defense ministers agreed to accommodate each other to bring down the cost of the Indian-made aircraft.
The 2008 request for proposal for the jets stipulates that 18 aircraft will be bought in fly-by-wire condition and the remaining 108 will be built by HAL on a license-production basis.
Contract negotiations between India's MoD, HAL and Dassault of France have been underway since 2012, after the Rafale was selected as the preferred aircraft over the Eurofighter Typhoon. However, dozens of meetings between the Indian and French sides have failed to close the deal because the French have refused to give guarantees on the delivery schedule of the aircraft that will be produced in India.
A sale of the Rafale is pressing for France, as the six-year defense budget assumes export sales of the fighter and a first delivery to a foreign client in 2016. A foreign sale helps relieve domestic financial pressure by diverting some of the annual production of 11 Rafales to an export customer.
Besides the negotiations with India, France is also reported to be in advanced talks on the Rafale with Qatar. ■
Email: vraghuvanshi@defensenews.com; ptran@defensenews.com.
