Rafale deal: French team likely to visit India

The development comes nearly four months after PM Narendra Modi and French President Francois Hollande signed a memorandum of agreement to purchase 36 Rafale combat jets.

The Indian side has been negotiating hard to bring down the price with Defence Minister Manohar Parrikar refusing to buckle under pressure even as questions were being raised about the delay in signing the contract.

The deal comes with the clause of 50 per cent offsets, which will be a bonanza for the domestic industry as it will lead to business worth at least 3 billion Euros and creating new jobs in India.

The tough part of the negotiations that began in July 2015 was to get the French side to agree to 50 per cent offsets in the deal.

Initially, Dassault Aviation, makers of Rafale, was willing to agree to reinvest only 30 per cent of the value of its contract in Indian entities to meet the offset obligations. 

“It is correct to say that differences over pricing as more or less being settled. A final deal should take place next month if all matters go as scheduled,” a defence source said. 

The sources said the price for 36 Rafales, as per the UPA tender, keeping the cost escalation and dollar rate in mind, comes to a little over Rs 65,000 crore. 

This includes the cost involved in making changes India has sought in the aircraft, including Israeli helmet mounted display and some specific weaponry, among others. The expectation is that the final deal will be clinched by Mayend.