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September 8, 2016

Rafale deal at final clearance level, may get go ahead soon


It’s going to be a big test for Indo-French relations as the Rafale fighter jet deal has reached the final clearance level after protracted negotiations.
 The price of the combat aircraft has come down to 7.25 billion and Paris is offering cutting-edge technology, including jet engine knowhow, to India. Sources told ET the deal for 36 fighter aircraft could be cleared as early as the next meeting of the Cabinet Committee on Security (CCS), with the defence ministry completing all formalities and negotiations with the French side. A decision on the deal is critical for France that has suffered a setback with the leak of sensitive documents of the Scorpene submarine project, currently being executed in Mumbai. Also, French firms have come under the scanner for donations to an NGO operated by a Delhi-based consultant.
 The fighter jet deal, which was first announced during Prime Minister Narendra Modi’s Paris trip in April 2015, has been stuck for over a year on pricing and offset issues. The final terms of contract are currently being vetted by the Prime Minister’s Office (PMO). Sources said the issues raised by the PMO, after a scrutiny of documents, have been clarified by the defence ministry. “Unless there are any unforeseen complications, the jet fighter contract should happen soon. The price has been substantially lowered after several rounds of tough negotiations,” an official aware of the developments told ET.
 As part of the deal, France will invest 50 per cent of the value of the deal in the domestic defence and aviation sectors as an offset clause. France has offered 16 critical technologies to India as part of the deal. These technologies, which would be valued as part of the offset package, would be shared with the Defence Research and Development Organisation.
 The French side has also expressed its willingness to share technology and invest 1-billion to revive India’s combat jet engine project, Kaveri. The plan is to develop an upgraded gas turbine to power indigenous Tejas fighters by 2020. The French side will also assist Indian private industry in setting up a global supply chain as part of the offset plan. Among other projects, French firm Dassault is likely to set up a line in India with a private partner to manufacture major structural parts for its Falcon executive jet aircraft.

economictimes

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