India and France are likely to reach a breakthrough soon in negotiations on the Rafale deal, paving the way for the Indian Air Force (IAF) to induct 36 French-made warplanes. The deal could be worth Euro 8 billion.
A possible climbdown by the French side over a key sticking point in talks — an offset clause that requires France to invest 50% of the value of the contract in India — could help both sides clinch the deal, sources familiar with the talks said on Tuesday.
The sources said France had signalled a softening of its stand on the tricky issue following intervention at the highest levels of both governments.
During a visit to Paris in April, Prime Minister Narendra Modi declared India would directly buy 36 Rafale fighter jets from France but negotiations have dragged on for nearly four months due to disagreements over price and India’s offset requirements.
India had hoped to clinch the deal by mid-July. But France is unlikely to make any concessions on price.
“There has to be some give and take. A breakthrough appears to be in sight as PM Modi and President Francois Hollande are tracking the deal now,” the sources said.
India is likely to be the third country to buy the Rafale after Egypt and Qatar. The twin-engine plane has seen combat in Afghanistan, Libya and Mali.
The deal for the 36 planes led to the termination of a previous tender to buy 126 Rafale fighters from French firm Dassault Aviation. India picked Rafale jets over Eurofighter Typhoons in January 2012 after Dassault Aviation emerged as the lowest bidder for the tender.
India requires 45 fighter squadrons to counter a combined threat from China and Pakistan, but it has only 34 squadrons with about 18 planes each. Also, 14 of these squadrons are equipped with vintage MiG-21 and MiG-27 fighter planes.