Apart from the lengthy process, other factors that might impact the much-coveted deal include the upcoming general elections of 2014, economic recession and another cut in the defence budget.
The contract negotiation is going on, a process which is in 6-7 layers. Later, it will be sent to the ministry of finance. We are trying to speed up the process, defence minister AK Antony said in response to a question. The minister also made it very clear that the RfP that was issued is the final document of reference and no changes would be made to it.
This is indicative of the fact that somewhere the deal has run into trouble and maybe the French are putting pressure on the Indian government for making changes.
Highly placed sources told FE on condition of anonymity that soon after Dassault emerged the lowest bidder (L-1), beating its rival Eurofighter on life cycle costs, the French side has been demanding more money for the transfer of technology and is not very comfortable on the production of the fighter machines at a later stage at state-owned Hindustan Aeronautics Limited (HAL).
The Dassault team that visited the HAL facility in Nashik were disappointed by the infrastructure there, sources added.
The defence minister had turned down Dassaults assertion that if it is given the overall responsibility of the project, it should be given the freedom to decide on the quantum of work to be shared between HAL and private companies in the programme. While rebuffing Dassaults contention, the ministry has also highlighted that the RfP for the tender issued in 2007 clearly outlines role of HAL as the projects lead-integrator and changes at this stage cannot be permitted. According to official sources, the negotiations have dragged on for so long also due to issues related to MMRCAs 50% offsets requirement and transfer of technology. The French, it appears, are unwilling to transfer technology such as that of the electronically scanned AESA radar, citing lack of maturity of the Indian defence industry to absorb critical technologies.