France May Agree On Price, Offsets Clause In Indian Rafale Deal

Deadlock over India’s Rafale purchase has been broken after the Defense Acquisition Council (DAC) gave a go ahead for further negotiations to buy 36 fighter jets.

According to sources, the French proposed 8 billion Euro earlier for the deal. It might possibly come down with the price and also agree an offset clause that requires France to invest 50 per cent of the value of contract in India. France has softened its stand after a political intervention by both governments.

So far, the agreement was delayed due to differences over offsets and price of the twin-engine fighter.

The unit price of the 36 Rafale aircraft was 25 percent higher than the $200-million price tag offered to the Indian prime minister during his April visit to France.

Sources quoted in the French media last week reported that higher price was because the Indian Air Force (IAF) was asking for a different set of armaments than what was proposed under the earlier RFP route and that Indian wanted offsets which would push up the final cost.

The DAC approval comes after the negotiation committee briefed the DAC about the progress so far. The agreement will be signed when both negotiation teams agree on the purchase agreements.

The negotiating committee is considering the 50 per cent offset requirements, as well as the arms and equipment the fighters will be fitted with.