France may have lowered the price of the Dassault Rafale fighter aircraft for India offering it at price it charges to the French Air Force in a bid to quickly conclude the deal.
The deal to buy 26 fighter planes is expected to be signed during the visit of French President Hollande to New Delhi where he has been invited to the chief guest during the Republic Day Parade.
However, there is no official word from either the French or the Indian sides if an agreement is scheduled.
According to a report in the Indian Express Newspaper, the price and a 30% offsets clause were the two stumbling blocks in arriving at a closure of the deal which was broadly agreed between the Indian and French governments during the visit of Prime Minister Modi to France last April.
Modi’s personal rapport with the French President is said to have helped rescue the deal as the two sides struck to their respective positions- India wanting 50% offsets and the French side claiming that a government-to-government deal where the aircraft would be fully manufactured in France could not have offsets.
The cost of 36 aircraft including weapons and training of pilots and crew is said to be ballooned to over US$10 billion. Earlier reports in the French Media said that France did not want to sell the aircraft at a price lesser than what it had offered to Egypt and Qatar.
Even if a broad agreement is in place between the two negotiating teams, the Indian side will still have to run the terms of the contract past the Finance Ministry and the Cabinet Committee on Security, a major challenge for India’s bureaucracy to pull off a major weapons deal in a matter of days.
Meanwhile, French Defence Minister Jean-Yves Le Drian had said last Thursday that an agreement on the sale of Rafale to India was not "excluded" on the occasion of this visit. "I hope that this can be done (...) It is not excluded, but it is not officially recorded," he said to RMC-BFM TV media (translated from French).
Understanding the meaning of Le Drian’s statement is that the signing of the contract is not officially scheduled as part of Hollande’s visit though the signing has been excluded either. If anything, the defence minister’s statement spells out an uncertainty. In the fast changing world of the Rafale contract negotiation, things may have changed for the better or worse in the space of 3-4 days.