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India, France set to ink Rs 55,000 cr deal for 36 Dassault Rafale fighter planes this week

Since the deal is government-to-government, the inking of the IGA symbolises that the deal is on track. Several media reports claim that besides the IGA, other aspects relating to costs, offsets contract are complete, but officials in the MoD remain tight-lipped

By: | New Delhi | Updated: September 22, 2016 7:06 AM
Since the deal is government-to-government, the inking of the IGA symbolises that the deal is on track, they explained. (Reuters) Since the deal is government-to-government, the inking of the IGA symbolises that the deal is on track, they explained. (Reuters)

India and France are expected to ink the Inter-Governmental Agreement (IGA) for the purchase of 36 French Dassault Rafale fighter planes later this week in the presence of French defence minister Jean Yves Le Drian, who is arriving here on Thursday.

Sources told FE: “With the conclusion of the IGA, the ongoing negotiations for the 36 aircraft will come to an end.”

Since the deal is government-to-government, the inking of the IGA symbolises that the deal is on track, they explained.

While several media reports claim that besides the IGA, other aspects relating to costs, offsets contract are complete, officials in the MoD are tight-lipped.

A source said: “The final deal is expected to cost about 7.87 billion euro (Rs 55,000 crore) depending on the currency fixation in the contract. In absence of a benchmark of the cost approved by the previous government, the fresh negotiations for the 36 aircraft include —cost involved in making changes India has sought in the aircraft, including Israeli helmet mounted display and some specific weaponry, among others.”

However, “What is not clear is if the negotiations include 18% customs duty that India would have to pay for importing the aircraft as was announced during the budget this year,” they pointed out.

Another point is the payment of advance which India will have to make. “At least 50 % advance will have to be made including 15 % immediate payment,” the source said, adding that the French government will stand guarantee. From the time the contract for the 36 aircraft are inked, the deliveries will start in 2019.

As per the India-France joint statement issued by the two countries during Prime Minister Narendra Modi’s visit to France, the government of India conveyed to the government of France that in view of the critical operational necessity for multirole combat aircraft for the Indian Air Force, the government of India would like to acquire 36 Rafale jets in fly-away condition.

And the two sides had then also agreed to conclude an inter-governmental agreement (IGA) for the supply of the aircraft. A negotiating team had been constituted to negotiate the terms and conditions for the procurement of 36 Rafale jets and recommend a draft agreement.

The Rafale aircraft will have advanced features like advanced electronically scanned array radar, mid-air refuelling and advanced electronic warfare equipment as part of its design. Though the final cost of the deal for 36 aircraft has not yet been finalised, India has asked France to discharge a 50% offset liability of the overall contract cost.

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