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  1. Budget 2016: Rafale jet deal unlikely in current fiscal

Budget 2016: Rafale jet deal unlikely in current fiscal

The wait for the 36 Rafale combat aircraft is going to get longer due to budgetary constraints and the delay in concluding negotiations with French company Dassault.

By: | New Delhi | Published: February 19, 2016 12:46 AM

The wait for the 36 Rafale combat aircraft is going to get longer due to budgetary constraints and the delay in concluding negotiations with French company Dassault.

According to sources in the ministry of defence, though the negotiations with Dassault have been put on fast track, the deal is not expected to be cleared during this fiscal.

Speaking to FE on conditions of anonymity, an officer who has been part of the negotiating team, said, “The negotiations with the French company are on track. But there are several other agencies involved in this pact and it will take another few months before the negotiations are complete, which means the deal will not be done this fiscal ended March 2016.”

The sources have indicated despite PMO’s push for this deal, the cost of the combat machines which has gone up since the last negotiations and issuance of RFP in 2009, Indian side is expecting that through negotiations it will manage to strike a deal at $ 7 bn for 36 fighter jets.

It is uncertain if the contract would be signed within the current fiscal even if negotiations were completed by late next month and all issues relating to technology transfer from Dassault were taken care of and papers readied before March 30.

Apart from the lengthy process, other factors that might impact the much-awaited deal include government’s several social programmes, implementation of the 7th pay commission recommendations and the OROP arrears.

According to official sources, the negotiations have dragged on for so long due to issues related to 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.

The final cost has come to about 2-3% more as it will be a government-to-government deal, defence minister Manohar Parrikar has expressed hope that the price of one Rafale jet will be 25% less. The deal could cost India close to $8 billion, which includes the cost of 36 fighter jets in fly-away condition.

“We are still in the process of deciding whether there is a need to order of all spare parts that the aircraft will need for a period of either five or ten years. And the negotiations are still on what kind of financial penalties can be imposed on Dassault Aviation Company which is making the combat plane if the performance was unsatisfactory,” the sources told FE.

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