January 27, 2016

India to play waiting game over Rafale price

India will not be tied down to a timeline on the Rafale deal and is prepared to wait it out for the French to lower the cost, sources have indicated.
Sources also indicated that even in the run-up to French President Francois Hollande’s visit, the Indian government had decided that it was not going to be pushed into a corner on time lines due to the presidential visit. “When you are acquiring a product, you look for the best price. Why should we set ourselves a time line,” sources said. As it turned out, the Indian government stood its ground due to which the two sides could not mutually agree on the cost of the deal. Speculation is rife that while France wants about 11.5 billion euros, In-dia wants the cost lowered to about 8 billion euros.
But the development is bad news for the Indian Air Force (IAF), which desperately wants modern fighter aircraft to boost the number of fighter aircraft squadrons. The developments have also become an example of how urgently-needed acquisitions for the armed forces have been delayed by several years, adversely impacting the operational preparedness of the three services.
In this case, the “request for proposal” (RFP) was issued way back in 2007 for 126 medium multi-role combat aircraft (MMRCA), a race which Dassault ultimately won after being selected as the lowest bidder. But after protracted contract negotiations between India and Dassault. the proposed deal made no headway, following which India decided last year, during Prime Minister Narendra Modi’s visit to France, that it would acquire 36 Rafale fighter aircraft directly from the French government by a separate process, citing the operational necessity of the IAF. India also decided to “withdraw” the earlier-issued RFP for 126 MMRCA.But the cost negotiations for these 36 aircraft, even after months of negotiations, could not be concluded in time for President Hollande’s visit, with top government sources describing the negotiations as “complicated”. French firm Dassault — the manufacturer of the Rafale — had already issued a statement on Monday saying it was actively supporting French authorities in their efforts to finalise a complete agreement in the next four weeks.


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