India's big-ticket 36 Rafale deal: Stuck in negotiations

Five months after India announced the deal to purchase 36 Rafale fighter jets "off the shelf" from France, much of the expectations from the big-ticket deal appears to have evaporated due to protracted negotiations that look set to continue for some more months

While voices from both sides say there is hope for the deal being concluded by December this year, on the French side there is some frustration at the long-winded nature of the negotiations.

The deal for purchase of the 36 Rafale jets, by Dassault Aviation, was announced during Prime Minister Narendra Modi's visit to Paris in April. India decided to purchase the 36 jets from Paris in a flyaway condition in a government-to-government agreement. The Indian Air Force, which badly needs to replace its aging fleet of Soviet MIG aircraft, was looking forward to the new planes.

However, the offsets clause that requires 50 percent of indigenous content in big-ticket defence contracts is believed to be a stumbling block, as also the pricing.

The deal is estimated at $8 billion. While India and France are still involved in the sticky negotiations, Egypt has already welcomed three Rafale jets into the country in July - five months after inking a deal for 24 of the French jets.
Egyptian President Abdel Fattah al-Sisi inked the contract for 24 Rafales in Cairo in February, in an estimated $5.6 billion deal. Qatar also inked a deal in March this year for purchase of 24 Rafale jets.

According to reports, three twin-seat variant of the jet were delivered in Cairo on July 21. Egypt inked a deal to acquire 16 two-seaters and eight single-seaters Rafale fighters. France is also training Egyptian pilots to fly the Rafale.

French Defence Minister Jean-Yves Le Drian visited Cairo a few days after France delivered the jets. He was to visit India on August 31 during which the deal was expected to be inked. Le Drian was in Malaysia to hardsell the Rafale and the Mistral warship.However, he flew straight on to Europe after it became known that the negotiations were not likely to be concluded soon.

The Indian defence ministry had at the time refused to confirm his visit.
According to French envoy Francois Richier, the defence minister had to fly to Europe to attend a EU defence ministers meeting. Richier said France is hopeful of concluding the negotiations soon.

The progress in negotiations was reviewed by the Defence Acquisition Council (DAC), the top acquisition body of the defence ministry, chaired by Minister Manohar Parrikar on September 1. Sources said the progress in talks between both sides was "satisfactory".
"The negotiations are on the right track. The DAC was briefed about it, and they gave the go ahead," an official told IANS, not wanting to be identified.

According to informed sources, France is reported to be unhappy over the offset clause that requires it to invest 50 percent of the value of the contract in India. This clause was present in the original deal for 126 Medium Multi Role Combat Aircraft (MMRCA) Rafale jets.

According to sources, the French may be given a "concession" in the clause and talks are on. However, a final decision is yet to be taken -- one of the reasons for the delay in the deal. Another factor is that India has asked for two air bases for the 36 jets, which France is reported to be unhappy about as it would lead to cost escalation, sources said.The French side is believed to be of the view that the Rafale should not be cheaper priced for India, as compared to the deals inked with Egypt and Qatar.

The Indian Air Force is expected to be down to 32 squadrons by the end of this year - 576 fighter jets short of the 750-strong fleet required as per the IAF vision document, in case of a two-front war with Pakistan and China.

At least three squadrons of the vintage Soviet Union-origin MiG-21 and MiG-27 single engine aircraft are scheduled to be phased out, officially by the year-end.
The IAF currently has 33 combat squadrons against a sanctioned strength of 39.5, which is sought to be raised to 42.

 deccanherald