India set to sign $8.8-bn deal to buy 36 Rafale fighter jets

16 Sep 2016


More than a decade after Indian proposed to buy Rafale fighter jets from France and after several rounds of tough negotiations, India is expected to sign a €7.87-billion ($8.84 billion) deal with the French government and Dassault Aviation for supply of 36 of the jets on 23 September.

French defence minister Jean Yves Le Drian is likely to visit India next week to conclude the inter-governmental agreement (IGA) between India and France for the purchase of 36 Rafale fighter jets.

Drian is expected in Delhi on 23 September 23 to conclude the IGA, and the Cabinet Committee on Security (CCS) is expected to clear the draft agreement by then, television channel NDTV reported quoting official sources on Thursday.

Defence ministry officials declined to give any specific date for signing of the agreement but said a cabinet meeting was scheduled for next Wednesday.

NDTV also reported that the countries have finalised the cost, offsets and service details for the deal, which will cost New Delhi about €7.87-billion (Rs59,087.96 crore) for the 36 fighter jets in fly away conditions.

A "working team" from France along with Indian officials is going through the contract details.

The sources said that once the IGA is firmed up, the document will go back to the Cabinet Committee on Security for a final clearance.

The decision to purchase 36 Rafale fighter jets was made after President Francois Hollande and Prime Minister Narendra Modi intervened in the procurement for the Rafale jets in 2015, ordering government-to-government talks after several years of commercial negotiations with Dassault failed.

The deal was delayed as a decision on issues like pricing and offset clauses. Prime Minister Modi intervened late last year to get France to agree to a 50-per cent offset clause.

This means that 50 per cent of the parts, including equipment, will be sourced in India, which would fetch orders worth nearly €3 billion for Indian companies, both big and small, generating thousands of jobs.

A high-level delegation from France could come down for the formal signing of the contract, French sources said.

Delivery of the fighter aircraft is expected to begin sometime in 2019.

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