After an impasse over technicalities, India and France are working to finalise the agreement for the direct purchase of 36 Rafale fighter jets before the visit of French President Francois Hollande to India as the chief guest of the next Republic Day parade here.
“Negotiations are in an advanced stage and both sides are working to reach an agreement before the visit,” a Defence Ministry official told The Hindu.
Last week, Defence Minister Manohar Parrikar said the deal was “in the final stages of price negotiations” and issues such as the 50 per cent offset clause had “almost been sorted out”. The offset issue had been one of the major sticking points in the negotiations.
“The deal was announced at the highest level politically; so both sides want to make sure it is adhered to,” a senior official said.
During his visit to Paris in April, Prime Minister Narendra Modi announced the direct purchase through a government-to-government deal as quickly as possible in view of the “critical operational necessity” of the Air Force, sidestepping the original medium multi-role combat aircraft (MMRCA) contest.
However, negotiations by the high-powered committee set up to negotiate the terms and conditions for the deal and recommend a draft agreement hit a road block over the issue of offsets and changes in configuration sought by the Air Force.
Offset clause
Offset clause applies for defence deals worth over Rs. 300 crore under which companies are to invest 30 per cent of the value of the contract back in the country. For the MMRCA deal, the government had fixed it at 50 percent. In addition, the Air Force wanted some structural changes to the aircraft to incorporate the indigenously built “Astra” beyond visual range (BVR) missiles.
France insists that the cost of the deal would go up and delivery timelines delayed because of the offset clause and changes sought. Official sources said a workaround had now been agreed upon.
The Air Force urgently needs new fighter aircraft to arrest the depleting fighter strength as MiG-21s and -27s are phased out and induction of the indigenous light combat aircraft has been repeatedly delayed.
It is still unclear if the Defence Ministry intends to order additional Rafale jets over and above the 36 or how it intends to replace the MiGs. “As of now, we are talking about 36 [planes]. I am not saying that it means we are thinking of buying more. To upgrade the Air Force, we are preparing a road map. Once that road map is finalised and approved by the government, we will go ahead as per the road map,” Mr. Parrikar said recently.
The Air Force has said on several occasions that it requires at least six squadrons comprising 108 Rafale or similar planes to arrest the depleting force levels and maintain the combat edge with respect to China and Pakistan.
