French FM offers India 1 bn to fund projects, as Rafale talks stall

The 1 billion euro credit line will be distributed through the French development agency over a three-year period, said Laurent Fabius on Tuesday.

India, which has said it needs $1 trillion of investment by 2017 to upgrade its infrastructure, is keen to attract foreign development agencies and companies to help finance new roads, railways and cities.

Prime Minister Narendra Modi, who took office in May, wants to reinforce India's status as a regional power, and has whetted the appetite of Western powers, who are all scrambling for a piece of its economic pie.

Fabius said he was confident that French aviation company Dassault would be able to supply New Delhi with 126 Rafale fighter jets worth 20 billion dollars. But on Tuesday he sounded less upbeat after a meeting with Modi.

"The next step is for Dassault and the (Indian) government to discuss the details which have not yet been discussed and hopefully to reach a conclusion," he told news agency reporters. "For us, the earlier the better ... but it's a normal negotiation and the way it must be."

The contract has been under negotiation for two years. And rival countries like Britain see this as a potential opportunity to sideline the French and push forward their own Eurofighter jets.

However, extending a credit line to the Indians, could allow France to boost it ties with the South Asian nation, and gain an early link to the country's future infrastructure schemes, if it it fails to conquer its aviation industry.

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