NEW DELHI: Under pressure to conclude the much-hyped Rafale warplanes deal with France, Ministry of Defence (MoD) officials have fired a warning shot to the French negotiators to reduce the price by 30 per cent if they want to ink the deal in this financial year.
An MoD official said India wants to pay `65-68,000 crore (8 billion euros) for 36 Rafale fighter jets fitted high-end weapons and radars systems, while Dassault-which manufactures the aircraft-has quoted `90,000 crore (12 billion euros).
“Though the French have come down marginally on their previous stand, we have categorically told them to come down to nearly 30 per cent if they want to clinch the deal in the current financial year,” an MoD official told Express. IAF is expected to get the aircraft three years after signing the contract.
In the absence of a mutually agreed price, the deal could not be inked during French President Francois Hollande visit to New Delhi as chief guest for the during Republic Day. In a joint statement on January 25, Prime Minister Narendra Modi and Hollande had hoped to sort out the financial aspects in “a couple of days”. Dassault Aviation had also said it expected a complete agreement on the planes in four weeks.
Dassault negotiators are believed to have committed setting up a production line in India, but MoD officials are sticking to serious cost bargaining. Moreover, France has also apparently agreed to 30 per cent offsets in the Rafale deal, which means French companies such as Dassault will have to plough 30 per cent of the contract value back into India as offsets. From the beginning, MoD was eyeing at least 20 per cent less per aircraft compared to what was offered in the 126 Medium Multi-Role Combat Aircraft deal during UPA-II.
The 36 nuclear-capable Rafale jets will come to India in fly-away condition with weapon systems such as active electronically scanned phased array radar, high-end beyond visual range missiles and defensive weapon systems. During his France visit, the Prime Minister had announced the decision to buy 36 Rafale jets, citing operational necessity of IAF, which is down to 34 fighter squadrons against authorised strength of 42.