New Indo-French Agreement Needed To Finalize Rafale Deal

India has started work on new Inter-governmental agreement (IGA) with France, following the finalization of 7.3 billion Euros (US$8.2 billion) contract for 36 Rafale fighter aircraft.

The cost, offsets and service details have been finalised and now the effort is to firm up IGA as envisaged in a pact signed on January this year when French President Francois Hollande visited India, various media reported Monday.

"The work on the inter-governmental agreement with France has started and would be finalised soon," an official said. The text and language of the agreement is being fine-tuned and the deal is in the final stage, the official added.

"The deal is in final stage," Defence Minister Manohar Parrikar said. Last month, a report submitted by the team negotiating the much-anticipated Rafale deal with France was cleared by the Defence Ministry.

The file was then sent to the Prime Minister's Office for review and clearance. The PMO had sought from the Defence Ministry some clarifications on the life cycle costs and unit price of the aircraft which were replied to.

The deal is expected to be worth about 7.89 billion euros for the 36 fighter jets in fly-away conditions. The weapon systems, part of the deal, will also include the new-age, beyond visual range missile, Meteor, and Israeli helmet mounted display.

The delivery for the fighter aircraft is expected to begin in 2019, with an annual inflation capped at 3.5 per cent.

The price of the deal was brought down from nearly 10 billion euros, as sought initially, due to various reasons including tough negotiation by India, the discount offered by the French government and reworking of some of the criteria.

During his visit to France in April last year, Prime Minister Narendra Modi had announced that India would purchase 36 Rafale jets in a government-to-government contract.

Soon after the announcement, the Defence Ministry scrapped a separate process that was on to purchase 126 Rafale fighter planes, built by French defence giant Dassault Aviation.