Due to a stalemate on the financial aspects of the Rafale deal, India and France could not come to any conclusive agreement on the sale of fighter planes on Monday.
However, the two countries signed a Memorandum of Understanding (MoU) relating to Inter Governmental Agreement (IGA) for purchase of 36 Rafale planes which basically talks about the intention to buy the planes from the French Government without specifying when and for how much.
In all, 14 agreements were signed covering civil nuclear energy, education, renewable energy, space and Information Technology between the two countries during French President Francois Hollande’s ongoing visit to India.
With hectic negotiations still going on the “complex” Rafale deal, sources said nothing could be finalised during Hollande’s visit since the two sides could not agree on the pricing of the planes. Prime Minister Narendra Modi said this should be sorted out soon.
“In the field of Defence cooperation, leaving out financial aspect, India and France have signed Inter-Governmental Agreement on purchase of 36 Rafale fighter jets. We expect that even the financial aspects pertaining to purchase of Rafale jets will be resolved as soon as possible,” Modi said at a joint Press event with Hollande. Terming the signing of IGA as a decisive step, Hollande sounded optimistic for the financial issues to be sorted out soon.
India and France are in negotiations for the Rafale fighter jets in fly away conditions for the last one year. The deal is largely stuck due to pricing of the planes. According to Government sources, the price for 36 Rafales, as per the UPA tender, and keeping the cost escalation, comes to about Rs65,000 crore. This includes the cost involved in making changes India has sought in the aircraft, including Israeli helmet mounted display and some specific weaponry. The effort is now to bring down the price to less than Euros 8 billion (Rs59,000 crore). Another sticking point is the 50 per cent payment in advance and the offset clause by India.
Dassault Aviation, manufacturer of Rafale, said, “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.” It said the agreement will pave the way for the “conclusion of a contract” for the sale of Rafale.
India and France also decided to increase cooperation in other fields. “From making railway engine to satellites, border security to space boundaries, from joint archeological excavations to smart cities; solar energy to nuclear power; Namaste India to Bonjour France — our decisions today will develop our bilateral cooperation in all these areas,” Modi said summing up the bilateral talks. France will also participate in ISRO’s next Mars Mission.
On the civil nuclear side, Hollande and Modi have urged their industrial companies to conclude techno-commercial negotiations by the end of 2016 for the construction of six nuclear power reactor units at Jaitapur. One MoU between EDF and NPCIl was revised for the construction of six units at Jaitapur as Areva, the company with which original contract was signed, is now being taken over by EDF.
France has reiterated support for India’s quest for a permanent seat in the United Nations Security Council and the Nuclear Suppliers Group. Hollande welcomed India’s decision to ratify the Convention on Supplementary Compensation for Nuclear Damage.
Hollande lauded Modi’s intervention at the climate change conference. “I am aware Modi had potential reluctance at the COP 21. He wanted the innovation technology for developing countries to be spread. We owe it to, including Modi for what was achieved at the climate conference,” Holland said and described his visit as “outstanding and exceptional.”