No Headway In Rafale Deal Despite Indian, French Defence Ministers' Meeting

French Defense Minister Jean-Yves Le Drian met his Indian counterpart, Manohar Parrikar on Tuesday in what is being described as a "last ditch" attempt to sell 126 Dassault Rafale jets estimated at US$20 billion.

The absence of an official comment from Paris or New Delhi about the meeting has allowed speculation to gain ground about what transpired, prominent among which is that the stalemate continues. The deal has been snagged for three years over issues relating to cost and who would assume responsibility for assembly in India.

This is the second meeting between the two leaders in less than three months over the stalled deal. At the previous meeting, India had asked France to send an "empowered" delegation which could decide on lingering issues on the spot instead of bouncing decision making with Paris. Such a delegation was sent in the beginning of this year, according to sources.

A decision on the Rafale acquisition will have to wait till March for the Contract Negotiation Committee (CNC) final report, Indian Defense Minister Manohar Parrikar had said during the last week’s Aero India Airshow. The minister's statement reveals that the negotiations are far from complete. For the purchase process to move forward, the CNC's report should be forwarded to the MoD, which if approved, will be sent to the cabinet committee on security for final approval.

However, the flying down of Le Drian to New Delhi is indicative that several major issues are still to be addressed. That the CNC is taking so much time is indicative that parameters set out in the request for proposals (RFP) have not been met.

A report in an Indian newspaper, Financial Express last week throws some light on what might be wrong.

A source quoted by the paper says, ”the French company had offered 22% work share for Hindustan Aeronautics Limited (HAL) at the initial stage of negotiations, as its  response to the RFP was influenced by a planned partnership with Reliance Industries,  that planned to expand into aerospace and defence in 2011.

The newspaper quoted, Air Marshal (retd) M Matheswaran, senior adviser to HAL as saying, “guaranteeing HAL’s work is not the issue, but that the French are being “rigid” and refusing to stand behind the integrity of the design.

Matheswaran, who was involved in drafting the original RFP for the deal, added: “Unfortunately, the French don’t want to be accountable in any way.  However, the original equipment manufacturer has to stand guarantee with respect to design and integrity of design.  By constantly denying to take responsibility for production of the 108 aircraft at HAL, the French are trying to get away from the OEM’s responsibility.” Also, it is about technology transfer, which the French are loath to do."