As the NDA government inches toward closing the multi-billion euro Rafale fighter deal, New Delhi has sought a waiver from a key provision that requires India to shell out an advance guarantee.
If France accepts the Indian demand, it will result in a saving of more than euro 134 million, South Block sources said on Friday.
The deal for 36 Rafale warplanes is expected to be worth around euro 7.3 billion.
The sources said the deal was stuck as India had put its foot down on doing away with the advance guarantee clause as it was a government-to-government sale. The sources said defence minister Manohar Parrikar has conveyed the Indian position on the issue to French authorities through diplomatic channels on Thursday. It is learnt all other issues have been resolved.
Last week, Parrikar informed Lok Sabha that the team negotiating the deal to buy the French fighters, manufactured by Dassault Aviation, had submitted its final report to the government.
A favourable response from France to the Indian proposal could see the deal being sent to finance ministry in the coming days, the sources confirmed. Finance ministry clearance will pave the way for final approval by the Cabinet Committee on Security, headed by Prime Minister Narendra Modi.
The deal is crucial for the Indian Air Force which is grappling with a significant drawdown of its fighter fleet. The IAF has a 33 fighter squadrons – each consisting of 18 fighter planes, but it requires 45 combat units to counter a combined threat from China and Pakistan. The IAF admits it does not have sufficient number of warplanes to fight a two-front war.
The plan was to buy 126 fighter planes but the Centre scrapped that deal, opting to buy 36 jets in fly-away condition from France. The new deal was announced by Modi during a visit to Paris last year.