Rafale deal: France to invest 50% of contract's worth in India's related sectors

India and France have reached an understanding on the offsets segment under which the French have agreed to invest 50 per cent of the 36-aircraft Rafale fighter deal's worth in related sectors.

Estimated at $4.5 billion, or about Rs 30,000 crore, this will make it one of India's biggest-ever offsets deals.

Even as the deal was being reached, French aircraft manufacturer Dassault had already reached out to Indian companies in the defence and security industry for possible Make in India partnerships.

The negotiations will move toward settling the contract for the actual aircraft sale. Since this is a government-to-government transaction, sources said, both sides will now open and examine Dassault's commercial bid. From this will flow the main negotiations on final price, lifecycle costs and other details related to the aircraft itself.

A breakthrough in the offsets deal was imminent after a top-level French team led by engineer-general Stephane Reb, director of the international directorate of the DGA (General Directorate for Armament), came to India for talks that set the stage for the final paperwork.

Following this, Prime Minister Narendra Modi met French President Francois Hollande at the UN General Assembly session in New York. Matters have moved at a rapid pace after the Defence Acquisitions Committee gave the green signal on September 1 for negotiations to start.

The deal for off-the-shelf purchase of 36 Rafale aircraft was reached during Modi's trip to Paris in April. It was stuck for over four months on pricing and offsets issues, which have been partly addressed after high-level political intervention. Both sides will eventually work out an intergovernmental agreement through which the French government will stand guarantor to all commitments that Dassault will undertake in the contract.

(Image credit: Economic Times)