France has “marginally” reduced the price of the 36 Rafale fighter jets even as India is insisting on a further scale down. The ongoing negotiations over the price of the aircraft jets could take another six weeks before the final price is fixed, top Government sources said here on Wednesday.
The price for 36 Rafales, as per the tender for medium multi-role combat aircraft (MMRCA) floated during the UPG regime, comes to over Rs66,000 crore (around 9 billion Euros). “The effort is to bring down the price to around Euros 8 billion (over Rs59,000 crore),” sources said. So far, the two sides could not finalise the financial aspect of the deal despite several rounds of negotiations.
Informing that the actual price negotiations only started from January 21, sources said, “They (France) have come down from the original price as per the earlier tender of the UPA but we expect more.” Asked about plane price being offered by France now, they said it has been reduced “marginally.”
As per the MMRCA tender for 126 aircraft, the cost of Rafale jets also include the cost involved in making changes that India has sought in the aircraft, including Israeli helmet-mounted display and some specific weaponry, among others. The overall tender, now scrapped, was pegged at more than $10 billion.
Prime Minister Narendra Modi and French President Francois Hollande had agreed during their talks earlier this week to conclude an Inter- Governmental Agreement for supply of the aircraft “on terms that would be better than conveyed by Dassault Aviation as part of a separate process underway,” which was the MMRCA tender.
Officials said another crucial point under discussion between the two countries is the advance payment to be made by India once the deal is inked. “At least 50 per cent advance will have to be made, including 15 per cent immediate payment,” the sources said, adding that details on how the French Government will stand guarantee was being worked out.
“Also, the document (Inter-Governmental Agreement) will need legal vetting and clearance from the Cabinet Committee on Security(CCS),” sources said. They also said that 50 per cent offset will apply to the deal. France had initially not agreed to it but the roadblock was removed in August last year after Modi spoke to Hollande over phone.
Following the MoU signed on January 25 during Hollande’s visit, Dassault Aviation, the manufacturer of Rafale, had said in a statement, “We are very pleased with this progress, and actively supporting French authorities in their efforts to finalise a complete agreement within the next four weeks.”
They said the agreement will pave the way for the “conclusion of a contract” for the sale of 36 Rafale fighters to India.