Are Indo-French Negotiations Over Rafale Purchase Deadlocked Over Price?

Price of the Dassault Rafale fighter aircraft seems to be the main sticking point in Indo-French negotiations to purchase 36 units of the medium multi-role combat aircraft (MMRCA).

The negotiations which commenced in May this year to meet the “urgent requirements” of the Indian Air Force have not reached fruition despite several rounds of meetings. From earlier optimistic assessments of Indian and French officials that the talks would be wrapped up in 2-3 months, there is no firm timeline being talked about now.

A high level French team which arrived here towards the end of September appears to have returned without any significant breakthrough. There is no official information either from the French or the Indian sides on the progress of the negotiations leading to speculation that the talks may have been deadlocked.

A former senior officer of the Indian Air Force told Defenseworld.net correspondent, “It was expected that the price negotiation will take place within the larger construct of  a $ 4.5 billion deal. The other issue was maintainability, which was to follow the Mirage 2000 model of 1985, where the HAL was not the desired agency but the Base Repair Depot of the IAF. There are some problems on both those counts. Being these the reason, the deal is stuck."

Indian Defence Minister, Manohar Parrikar had promised Parliament in July that the Inter-Governmental Agreement for supply of the aircraft on terms that would be better than conveyed by Dassault as part of the earlier negotiations based upon the purchase of 126 aircraft.

However, in the new negotiations, France has taken the stand that it would not offer a price lower than what it has contracted with Egypt and Qatar. What this means is that the price in its two recent export successes is higher than that sought by India.

Further, add-ons sought by Indian such as integration of the locally-made Astra air-to-air missile calls for design changes that are expected to add to the unit cost of the aircraft.

A source familiar with Indian government procurement said that the Ministry of Defence (MoD) may not agree to a price substantially more than what was proposed under the earlier negotiations for 126 fighters as it could be afraid of adverse comments from the government’s accounting watchdog, the Comptroller and Auditor General (CAG). In the past, the CAG has been critical of defence procurement deals which have had severe cost-overruns.