India, France Agree on 50% Offsets For Rafale Aircraft Deal

India and France have agreed to invest 50 per cent of the purchase price for 36 Dassault Rafale aircraft in offsets worth about US$ 4.5 billion.

The offsets agreement in the deal for 36 aircraft was reportedly clinched in the last few days, according to the Economic Times newspaper which credited its information to ‘people aware of the matter.’

While there was no official comment from the Indian MoD on the report, various media said that the offsets involved an Indian private industry conglomerate which was previously not connected with the defence industry.

Earlier reports had said that France was reluctant to include offsets in the deal for 36 aircraft but India’s insistence that it was within the spirit of Prime Minister Modi’s push for ‘Make in India’ had nudged Paris to negotiate an offsets agreement. It was within this context that a French team led by   Stephane Reb, director of the international directorate of the DGA (General Directorate for Armament), had come to India in late September.

It is also not clear what form the offsets will take, direct or indirect. Under the previous negotiations for 126 aircraft, offsets were said to be direct which means the investment in India will have to be for fighter aircraft technology.

With offsets reportedly out of the way, the the negotiations will move forward to settling the lifecycle costs, weapons configuration and eventually the final price. It is not yet clear how long that process would take.