Limited Tech Transfer, No Source Code in India's $40B Rafale Order

France reportedly does not plan to transfer source code for key electronic systems as India moves ahead with a proposed $40 billion order for 114 Rafale fighter jets under the Multi-Role Fighter Aircraft (MRFA) programme.

On February 12, the Defence Acquisition Council granted Acceptance of Necessity (AoN) for the Multi-Role Fighter Aircraft (MRFA) programme, clearing the way for government-to-government negotiations with France. The approval does not constitute a final contract with the manufacturer, Dassault Aviation.

The proposed purchase would be India’s largest arms acquisition to date. India previously ordered 36 Rafale jets in 2016 for the Indian Air Force and finalized a 2025 agreement for 26 naval variants for deployment on INS Vikrant.

The MRFA programme replaces the earlier Medium Multi-Role Combat Aircraft (MMRCA) tender for 126 aircraft, which was scrapped after disagreements over industrial sharing and liability involving Hindustan Aeronautics Limited (HAL).

Rafale assembly in India under “Make in India”

Under the current structure, 18 aircraft would be delivered from France, while 96 would be assembled in India under the “Make in India” initiative.

Production would involve cooperation between Dassault Aviation and TATA. Local content is projected to begin at 30% and exceed 60% by the end of the contract. Some Indian analysts have called for at least 80% local content to meet industrial sovereignty goals.

In June 2025, the two companies signed agreements to manufacture Rafale fuselages in Hyderabad. The facility, expected to begin output in 2028, will produce rear, centre and forward fuselage sections at a rate of up to two complete sets per month, marking the first production of full Rafale structural components outside France.

No access to SPECTRA source code

French publication L’Essentiel de l’Éco reported that Paris does not intend to transfer the source code for the SPECTRA electronic warfare suite and other core avionics. These systems manage radar functions, electronic protection and mission operations.

There has been no official comment from either government.

If confirmed, the restriction would limit India’s ability to independently modify internal software or integrate certain sensors and weapons without coordination with French manufacturers. The report stated that France may instead provide application programming interfaces to allow limited integration without granting access to underlying software architecture.

India currently operates Rafale aircraft in the F3-R configuration with India-specific enhancements. The new order is expected to include jets built to the F4 standard, with discussions referencing a potential pathway toward the future F5 configuration.

India’s defence budget

The move comes as India’s defence budget increases 15% for fiscal year 2026–2027 to $93 billion, including a 22% rise in capital allocations for aircraft, ships and artillery systems.

Between 2026 and 2030, India’s defence expenditure could exceed $540 billion.

The U.S. is promoting the F-15EX and F-21, and Russia continues marketing its platforms including the Su-57. European competitors including Saab’s Gripen and the Eurofighter consortium remain engaged in the Indian fighter aircraft market.