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April 10, 2015

Big breakthrough in Rafale deal likely


India is likely to buy between 60 and 63 Rafale combat jets from the French aviation major Dassault in a government to government deal that may be finalised during Prime Minister Narendra Modi's talks with French President Francois Hollande, in Paris later today, top government sources have indicated.​

The decision to buy nearly three and a half squadrons of Rafale jets for the Indian Air Force (IAF) was taken at the highest political level hours before Prime Minister  Modi embarked on his three-nation tour on Thursday, the sources added. 


Under the new proposal, the entire process for procuring 126 combat jets would be scrapped, sources revealed. A new G-to-G (government-to-government) contract is likely to be negotiated between New Delhi and Paris to buy 
the​  Rafale jets in flyaway conditions.​


​Worried at the fast depleting combat jet fleet and concerned over the impasse in the nearly three year long negotiations on pricing, the top political leadership has decided to go for this compromise. Moreover, finding over Rs One Lakh Crore (around 18 billion dollars) to be allotted over a seven year period to buy the 126 jets as originally envisaged was proving to be difficult. But the government is confident of finding between 40 to 45,000 crore over a seven year period (around 7 billion dollars) needed to fund the purchase of about 60 Rafales.

By going for a G-to-G contract India is also likely to drive a hard bargain with the French and lower the price of the aircraft. By ordering 60 aircraft to be manufactured in France itself, the government is also hoping to skirt the tricky issue of guaranteeing quality of work under Hindustan Aeronautics Ltd (HAL), designated as the Lead Production Agency in India.
According to top sources, this approach is being adopted for two primary reasons: one, it is imperative that the IAF gets these jets as soon as possible in view of the fast depleting numbers and two, because the entire procurement procedure for the combat jets had turned into a chaotic process thanks to the indecision on part of the political leadership in the previous regime and some loopholes in the negotiations itself making it impossible for the government to arrive at a satisfactory solution, the sources revealed.

​The decision of course raises two fundamental questions: one, how will the IAF make up for the numbers since buying just 60 aircraft is not sufficient to augment its combat fleet. And two, what happens to the offset clause and technology transfer?

According to top sources, besides buying Rafales, the government will push HAL hard to deliver at least three squadrons of the Light Combat Aircraft (LCA), Mark II as quickly as possible​, procure more Sukhois  from Russia and also support the FGFA project in a big way to make up for the 12 squadrons of fighter jets which are likely to retire over the next four years.
As for offsets and ToT, given the precarious numbers in the IAF combat fleet at the moment, the government had no choice but to compromise on these two vital issues as a one-time exception, top sources have indicated.

- by nitinagokhale

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