Rafale fighter deal to get formal nod, Indian partner awaited

New Delhi: French Defence Minister Jean-Yves Le Drian arrives here on Monday to sign the formal deal for supplying 36 Rafale aircraft, the medium multi-role combat fighters of Dassault, to the Indian Air Force as agreed during Prime Minister Narendra Modi's visit to Paris last month, officials said.

Also keenly watched will be: Which Indian firm Dassult picks as a partner for a manufacturing base in India. Officials explained the main reason why the Indian prime minister had agreed so fast to take the deal forward is it fit well into his "Make in India" campaign.

"So a joint venture partner will be key and let's see," an official said.

The basic agreement is expected to be signed between France and India soon after similar pacts Paris entered into with Egypt and Qatar for 24 Rafael fighters each. The value of the deals with Egypt and Qatar is around 7.1 billion each, while with India it is in the region of $9 billion (Rs.55,000 crore), officials said.

"We are aware that Dassault will have large number of aircraft to deliver. If we take the orders from India, Egypt and Qatar together, the number of aircraft will be 84. So delivery is certainly an issue and we will raise it during the defence minister's visit," a senior official in the know said.

"I'm also told the rate of production for each Rafale is around one month," said the official. "But we've had a 30-year association with Dassault, thanks to the Mirage 2000 programme. This was a pretty successful deal. So deliveries will happen, we will also have good safeguards."

Explaining the finer contours of the deal, officials said that it could be an agreement both between the two governments and their respective defence ministries, as also with Dassault Aviation -- as this will give India a guarantee from the French government, along with the flexibility for the company on other aspects.

For example, the deal -- among the first to be entered into under the Indian government's new offsets programme -- will require the French to invest around 30-50 percent of the value of the contract in India for manufacturing units.

This will call for some collaborations and joint ventures in India for Dassault. Defence Secretary R.K. Mathur had also confirmed recently that this was, indeed, the first deal under the new offsets rule, requiring the French to make components and other articles here.

"The agreement is also very important for Dassault. In addition to the 84 aircraft on order, it also has to cater to the French Air Force. So, a pact for a manufacturing unit in India will help the French firm to build on the existing line at Merignac," an official said, referring to the facility near Bordeaux, southwest France.

India's original plan was to buy 126 Rafale aircraft -- valued at around $11 billion in the first tender floated in 2007. The planes were envisaged to be made in India with Hindustan Aeronautics. Given the delays, Modi had announced a truncated deal, to begin with, during his visit to France last month.