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  1. Rafale fighter jet deal with France runs into trouble again

Rafale fighter jet deal with France runs into trouble again

India and France are still negotiating the latter’s offer in terms of New Delhi’s offset clause regarding the multi-billion dollar deal to purchase 36 French Rafale aircraft.

By: | New Delhi | Updated: April 27, 2016 8:19 AM
rafale-reu-L Due to India’s insistence on the offset clause, tweaking of weaponry technology and plans to set up two bases for Rafale fighter planes would lead to cost escalation, which New Delhi is pushing to bring down to around 7-8 billion euro. (Reuters)

India and France are still negotiating the latter’s offer in terms of New Delhi’s offset clause regarding the multi-billion dollar deal to purchase 36 French Rafale aircraft.

Talking to FE on condition of anonymity, highly placed sources said: “The French company Dassault Aviation has offered 17-18 technologies as part of its offsets obligation in various sectors, including civil aviation, homeland security and partially services for the deal which is being negotiated under DPP-2013.”

However, this could create further delay in the process as the ministry of defence (MoD) has so far failed to form a team to evaluate the respective proposals made by vendors for the transfer of technology. The methodology for evaluating and comparing the value of the respective proposals for transfer of technology also remains unformulated and unclear, sources revealed.

This process is expected to be time-consuming as there are no parameters that can be referred to while putting a cost to the technologies being offered. Earlier, the French side had rejected India’s demand for a 50% offset clause, citing sharp cost escalation, but offered to participate in ‘Make in India’ projects to carry forward the talks. There is also a strong lobby of small and medium French enterprises that is against industrial offsets and sees it as a threat to the competitiveness of the French defence industry.

Due to India’s insistence on the offset clause, tweaking of weaponry technology and plans to set up two bases for Rafale fighter planes would lead to cost escalation, which New Delhi is pushing to bring down to around 7-8 billion euro. “While the government is keen to bring down the costs of the aircraft to as low as euro 7-8 billion, there is no way France will give a fully loaded aircraft at that price. India might be forced to then pay just for the platform and for add-ons pay extra money,” a senior official explained.

Offset policy was first introduced as part of the Defence Procurement Procedure (DPP), 2005, under which a foreign company has to invest back a portion of the deal into India.

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  1. Nanban
    May 1, 2016 at 11:40 am
    Bring Strong Nuclear Deterrence, Unsign the First use policy, invest the deal amount in indigenous projects. SLAP TO WESTERN PESTS
    Reply
    1. G
      Gautam
      Apr 27, 2016 at 2:52 pm
      Get SAAB and F-18 without delay and make the dealing public. This is far too long and waste of Indian and French people's time. Rafale is happy by it's to other countries and will not discount any price even if purchase is in larger numbers .
      Reply
      1. S
        sanjiv
        Apr 28, 2016 at 5:37 am
        don't know if the govt of India has very intelligent people working for them. The fact that it has taken years to get this one contract negotiated and that also at a much higher price than the original cost for the 126 aircraft of approximately 10 billion dollars. Now they are paying 8.8 billion for 36 aircraft. OK so they don't want to purchase US made aircraft because of political issues with US supply, then why did they purchase the heavy lift US made aircraft. Heck the quality of the US made aircraft is far superior to the Russian heavy lift aircraft. Likewise for the US made fighters far superior than any Russian made fighters. The cost per aircraft goes down as the number produced increases because the development cost gets spread over the greater number of aircraft. The French clearly are not adjusting the price as the production number increases and the cost of producing the aircraft goes down. If the French aircraft is really superior to the US aircraft in performance then how come only a few countries have ordered this aircraft and how come the price is not coming down as the production numbers increase. Only two reasons, greed by the manufactures and or the French government is subsidizing the cost of the aircraft for the French airforce. If their aircraft is superior to the US aircraft in performance and quality then why cant they the French guarantee the aircraft availability uptime of greater than 80% of the time. In my humble opioion India should dump the Dussalt aircraft with all these issues and seriously negotiate with the US companies to set up the manufacturing of the F16Viper and the F18 growler and possibly even the Grippen aircraft in India, The FEA18 Growler is a multifacet aircraft carrier based as well as land based with slight modification The F16 can be used to agument the IAF's strength and export to other countriesearn India foreign exchange, as well as satisfy the Modi govt's Make in India program. The Swedes are anxious to build in India too and can be used for export. Truly bring India into the 21st century as a modern country
        Reply

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