Are India and France Still to Bridge Differences on Rafale Deal?

The sudden decision by French Defense Minister to cancel a planned visit to India on his way back from Malaysia is an indication of all is not well in the negotiations of the 36 Rafale fighter jets sales to India.

The defense minister Jean-Yves Le Drian who was to arrive in New Delhi on September 2 to sign an inter-governmental deal on the purchase of 36 Rafale fighter jets cancelled his plans at the last minute. That the cancellation was unplanned is evident as the minister's spokesperson announced in Kuala Lumpur that Le Drian would be flying back to Paris and not to New Delhi.

The minister's visit to Delhi was specifically to sign the Rafale purchase agreement, according to the French media and his not coming is an indication negotiations could  not be completed in time to sign the deal.

The night before Le Drian was expected in New Delhi,  the Indian Defence Acquisition Council (DAC) had given a go ahead for further negotiations on the Rafale deal. The DAC decision is interesting in that the Indo-French discussions were on going and there was no indication earlier that the present negotiations had any kind of time limit.

Last week, the media in India and France were agog with reports that France and India had come to an agreement on the price, offsets requirements and weapon that would go on the aircraft and that the two countries were only 10 days from signing the deal. A subsequent report in the Times of India said what would be signed during Le Drian's visit would be the inter-governmental report which would then pave the way for the commercial contract.

According to earlier reports, the French have proposed 8 billion euro for the deal, an increase of some 20% over what was discussed under the earlier negotiations for 126 aircraft.  This was a sticking point for the Indians while for the French, it was offsets as demanded by the Indian MoD and modern weapons as demanded by the Indian Air Force.  Later reports uoting 'sources close to the deal' stated that France has 'softened its stand' on the price after a political intervention by both the governments. This is now questionable in the light of current developments.

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, according to the reports which was due to the 'add-ons' in the form of offsets and the weapons configuration.

However, French media reports quoting aides of the defence minister today said that 'major points of differences' have been ironed out and that the deal could happen in the foreseeable feature.