India, France Likely to Ink Rafale Deal on January 25

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New Delhi: India and France could sign a major defense deal during French President Francois Hollande’s visit for the Republic day celebrations in India. The two countries are likely to sign the deal for 36 Rafale fighter aircraft in fly away condition.

Prime Minister Narendra Modi had announced the intention to buy 36 Rafale jets off the shelf during his visit to France in 2014. “The two leaders (Modi, French President Fracois Hollande) agreed to conclude an inter-governmental agreement for supply of the aircraft on terms that would be better than what is conveyed by Dassault Aviation as part of a separate process underway,” the statement had said.

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Earlier, there were reports that the deal had run into trouble with government officials struggling to agree sales terms. Defence officials had said that both sides were wrangling over the unit price of the aircraft and a condition that planemaker Dassault Aviation invest a big percentage of the value of the multi-billion dollar contract in India.

Military officials had also warned of a major capability gap opening up with rivals China and Pakistan without new Western warplanes or if local defence contractors cannot build what the military needs in a timely manner.

As per industry experts, the price of a Rafale to French air force works out to anywhere between $200-220 million. “If we take the lowest value of $200 million, it will work out to around Rs 1,240 crore per aircraft. Even if we increase it to Rs 1,300 crore, it would be a better price than earlier,” sources said.

The price per aircraft not only includes its own cost but also that for maintenance, training of pilots and technicians, armaments and spares.

Qatar has recently signed a deal worth over $7 billion for 24 Rafale jets. This includes MBDA missiles and the cost for the training of 36 Qatari pilots and 100 technicians. The value of each aircraft thus comes to over $290 million.

Asked if that price would be acceptable to India, the sources said it would have been “very expensive”.

Modi had assured that the aircraft and associated systems and weapons would be delivered on the same configuration as had been tested and approved by Indian Air Force (IAF), and with a longer maintenance responsibility by France.

IAF chief Air Chief Marshal Arup Raha had in October admitted that he is “hopeful” that the deal for purchasing 36 Rafale jets off-the-shelf from France will be finalised by the year-end. He said that the negotiations for the deal, finalised during Modi’s visit to France in April, was progressing well.

According to earlier reports, the Indian Air Force (IAF) had asked for technical modifications so the latest weapons could be fitted to the jets. Initial technical specifications, which were part of the commercial negotiations, were outlined a decade ago when India began the process of seeking new fighters.