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  1. No final decision yet on Rafale deal: Manohar Parrikar in RS

No final decision yet on Rafale deal: Manohar Parrikar in RS

The main issue involves pricing, which is the production cost in India, and Dassault Aviation’s reluctance to stand guarantee for 108 fighters to be built by state-run HAL

By: | Published: March 18, 2015 12:56 AM

Despite several meetings between Indian and French officials to close the 126 medium multi-role combat aircraft (MMRCA) deal worth $20 bn before PM Narendra Modi travels to Paris next month, defence minister Manohar Parrikar informed the Rajya Sabha on Tuesday that “no final decision” has been taken yet.

French defence minister Jean-Yves Le Drian was here last month and had met Parrikar in an effort to resurrect the Rafale deal, even as a deadlock continues to hold it up.

The main issue involves pricing, which is basically the production cost in India, and Dassault Aviation’s reluctance to stand guarantee for the 108 fighters to be built by state-run Hindustan Aeronautics (HAL). The defence minister has again made it clear that the French defence major will have to go strictly by the request for proposal (RfP) document as it has stated clearly the requirements of the ministry for the 126 MMRCA.

While the minister said pricing will be decided on the basis of the RfP, it is understood that the cost negotiating committee (CNC) has submitted its report to the ministry of defence. As for the guarantee clause, he said the issue was between the French firm and HAL.

One of the main sticking points has been over who should carry the can for any problems with the 108 planes that would be made in India, with the government in New Delhi wanting guarantees from Dassault as an original equipment manufacturer (OEM). Dassault however has baulked at the idea of taking responsibility for the larger India-made batch of fighters. Under the RfP, the OEM is expected to take responsibility for what is being produced here.

As per the RfP, the French company will supply 18 of the twin-engine fighters while the remaining 108 will be made by HAL under technology transfer agreements with India.

The French Rafale and Eurofighter Typhoon were the only ones left standing after years of tests on technical and other aspects vis-a-vis the move to acquire MMRCA. Rafale was shortlisted in 2012 but since then final contract negotiations have been stuck on the pricing and guarantee clause, among others.

In December 2014, the minister indicated that the pending Rafale deal would be “resolved in a fast-tracked manner”. There were talks about the deal being concluded by this fiscal. However, indications are that it will now be pushed to the new fiscal, starting April. Sources also say that Modi’s visit to France is not indicative that the deal will be signed or announced.

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