The much-awaited deal for 36 Rafale fighter jets between India and France is likely to be concluded next month. The Government to Government deal between the two countries is pegged around £7.8 billion (Rs60,000 crore). Prime Minister Narendra Modi had announced the decision to purchase 36 jets in April last year during his visit to France.
Hopeful of wrapping up the deal by next month, Defence Minister Manohar Parrikar said “not much is left. It is in the last phase.” He made these observations in the context of ongoing final negotiations between French and India Defence Ministry officials besides Dassault company representatives. Dassault manufactures Rafale.
Refuting claims that the proposed deal was marred by delay, Parrikar said any such process takes at least six to eight months. “We started the process only in July last year. After Prime Minister’s statement in April, everything came to us. We asked them (French) for various options. We met them and finally one line was decided,” he said.
Noting that he is travelling for the next eight to 10 days, the minister said he will “see to it” that the deal is “concluded fast.” Elaborating upon the process, he said the negotiating team from the Indian side has to submit a report to the Minister about the discussions. The Union Cabinet will then discuss the deal and the two countries will first sign an Inter Government Agreement, Parrikar said adding these issues will take three to four weeks.
The proposed deal was announced by Modi during his visit to France last year. Subsequently, the government scrapped the earlier ongoing negotiations to buy 126 Rafales due to complex and protracted negotiation process thereby affecting the operational preparedness of the IAF.
Rafale had emerged as the lowest bidder and met all technical parametres. The other jets in the race for the 126-jet contract were Gripen(Sweden), Eurofighter(conglomerate of England, Germany and Italy) and F-16 and F-18(US). The scrapped contract comprised buying 18 jets off the shelf and Hindustan Aeronautics limited(HAl) was selected to manufacture the remaining 108 in the country through transfter of technology pact with Dassault.
The current deal comes with the clause of delivering 50 per cent offsets, creating business worth at least £3 billion for smaller Indian companies and generating thousands of new jobs in India through the offsets. Offset entails that the vendor will plough back 50 per cent of the contract price into the Indian Defence and aviation industry.
The French, reportedly, were reluctant to invest 50 per cent and favoured 30 per cent instead. As per the scrapped golbal tender, it was mandatory for the vendor to invest 50 per cent as offset. Several rounds of negotiations over the past few months followed over this issue and the French finally relented after Modi and President Francois Hollande discussed the matter, officials said. Once the deal is inked, the first lot of jets is likely to be inducted after two years, they added.