France has agreed to an Indian government demand to invest a part of the multi-billion dollar Dassault Rafale fighter jet purchase in ‘Make In India’ program as part of the deal.
“The French manufacturers of the Rafale fighter will commit to making investments worth $4.5 billion in the Indian industry as part of the deal. The French side has accepted in principle a 50% offset clause, which requires the Rafale manufacturers to invest half the deal value in India, the government will also liberalize its stringent defense offsets policy to address some specific concerns of the manufacturer,” Economic Times news daily quoted an unnamed French official as saying Monday.
“A top team from Paris, led by Engineer-General Stephane Reb, director of the International Directorate of the DGA (General Directorate for Armament) of the French ministry of defense will be in Delhi on Tuesday to work out final price negotiations and take the deal to the final stage,” the news daily reported.
The investments in India could include civilian projects that companies like Dassault and Thales are pursuing. One of the Make in India investments is likely to be in the manufacturing of components of the French Falcon executive jets as well as in the smart city projects of Thales.
According to earlier reports, the French have proposed 8 billion euro for the deal, an increase of some 20% over what was discussed under the earlier negotiations for 126 aircraft. This was a sticking point for the Indians while for the French, it was offsets as demanded by the Indian MoD and modern weapons as demanded by the Indian Air Force.
The unit price of the 36 Rafale aircraft was 25 percent higher than the $200-million price tag offered to the Indian prime minister during his April visit to France, according to the reports which was due to the 'add-ons' in the form of offsets and the weapons configuration.
However, French media reports quoting aides of the defense minister early this month said that 'major points of differences' have been ironed out and that the deal could happen in the foreseeable future.