India Set to Miss Another Promise Over Rafale Fighter Jet Deal

A Rafale fighter jet

 

India’s deal with France to purchase Rafale fighter planes is taking more time than expected as the two sides have yet to reconcile their differences over a number of issues related to the deal.

NEW DELHI     Manohar Parrikar, India’s Defense Minister, says “the negotiations are underway and the inter-government agreement and offset contract are yet to be finalized.

The details, including a transfer of technology through offsets, will emerge after the negotiations are completed.”

Replying to a query over the Rafale deal, Manohar Parrikar informed parliamentarians that the parties to the deal will decide whether or not the fighter jets are manufactured locally once negotiations are completed.

However, Parrikar clarified that the Rafale aircraft being procured will have advanced features like active electronically scanned array radar systems, the capacity for mid-air refueling and advanced electronic warfare equipment as part of their design.

Last week, the Defence Acquisition Council (DAC), the top decision-making body within India’s Defense Ministry, rejected France’s offer to sell 36 Rafale fighters for 8.49 bln USD. Sources say the DAC is seeking a further price reduction. Recently, France also proposed that it would assist India in reviving the unsuccessful Kaveri gas turbine jet engine project and a host of other projects including the manufacturing of fighter jet components, but it would take a final call only after the contract for procurement of Rafale jets was formally signed. According to sources, India has involed the French Embassy in order to expedite the negotiations, which remain mired amid many issues.On January 26, Indian Prime Minister Narendra Modi and visiting French President Francois Hollande suggested in a joint statement that negotiations for the purchase of 36 Rafale medium multi-role combat aircraft were nearly complete. Later, Manohar Parrikar, India’s Minister of Defense, set a deadline of June 2016 for the deal. However, the deal still hasn’t been announced.

France Puts Off India by Proposing New Conditions for Rafale Deal

French Rafale fighter aircrafts come back aboard the French Charles-de-Gaulle aircraft carrier, after flights on November 23, 2015 at eastern Mediterranean sea, as part of operation Chammal in Syria and Irak against the Islamic State group

 

Inter-government talks between India and France on the purchase of Rafale fighter planes have hit another major roadblock as France has reportedly proposed an arrangement that India is most likely to reject outright.

NEW DELHI             Highly placed sources in India’s Defense Ministry have confirmed that France has been exerting undue pressure on India to seal the Rafale fighter aircraft deal without finalizing the mandatory offset contracts. The offset clause of India’s Defense Procurement Policy (DPP) mandates that foreign vendors spend a portion of the deal’s amount on projects within India.France has proposed that it would assist India in reviving the unsuccessful Kaveri gas turbine jet engine project and a host of other projects including the manufacturing of fighter jet components, but it would take a final call only after the contract for the procurement of Rafale jets is formally signed.

Expert has view that India’s revised Defense Procurement Policy (DPP) has no room for such an arrangement.

Amit Cowshish, former finance advisor to the Ministry of Defense, says, “Defense Procurement Policy doesn’t support this proposal. According to the Indian defense policy, the Rafale deal contract as well as offsets contract ought to be signed at the same time. If the Ministry of Defense took this deal as exceptional, only then is it possible; but under the set procedure this is not possible.”

The offset policy is a mandatory provision which requires foreign vendors to invest a portion of the deal’s amount in India. The rationale behind the provision is to encourage foreign companies to invest in research and development, which would eventually make India self-dependent in defense equipment manufacturing. The French are willing to invest 50% of the deal’s amount, out of which 30% will be invested in the military aerospace research & development program.Sources from the Ministry of Defense say that France’s new condition has further complicated the deal, which had already been held back due to its many hiccups. To date, not a single major issue has been resolved between the negotiators. Apart from offset projects, the Ministry of Defense has yet to respond to the Ministry of Law’s objection over inter-governmental agreement for the Rafale deal.

On January 26 this year, Indian Prime Minister Narendra Modi and visiting French President Francois Hollande had suggested in a joint statement that negotiation for the purchase of 36 Rafale medium multi-role combat aircraft was near completion. Later, Manohar Parrikar, India’s Minister of Defense set a June 2016 deadline for the deal. However, the deal was not announced in June. Moreover, soures confirm that negotiators have not met for over a month now.