India To Acquire 36 Rafale Jets For USD 8.8bln

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Finally, India has struck a deal with France to acquire 36 Rafale fighter jets.

After six years of ‘tough’ negotiations with the European powerhouse, India made an announcement in this regard, saying that New Delhi would pay USD 8.8 billion for 36 fighter jets and it’s final. In March, a senior French official hinted that India might not purchase Rafale jets due to sharp differences between New Delhi and Paris over the price. However, France managed to strike the deal after lowering the price. According to sources close to Dassault Aviation (the manufacturer of Rafales), the French company will sign an agreement with the Indian government within three weeks and deliver the first lot of aircraft in November 2017.

Speaking at a press conference in New Delhi over the weekend, an Indian Defence Ministry official said that Dassault had initially sought around USD 12 billion for the sale of 36 fighter jets. But, the Narendra Modi government bargained hard to close the deal USD 3 billion below the asking price. During his visit to Paris in December 2015, Prime Minister Modi informed the French government that India might acquire 36 read-to-fly jets, if Dassault agreed to lower the price. After four months of extensive negotiation, Dassault realised that it had no other option, but to scale down the deal.

Meanwhile, the Indian Air Force (IAF) has welcomed the government’s decision to acquire 36 Rafale jets, saying in a statement that the deal will allow IAF to start replacing its ageing jet fleet from 2017 with French fighter jets. Senior IAF officers believe that the Air Force can effectively check the capabilities of neighbouring Pakistan and China with brand new Rafales.

Under Prime Minister Modi’s ‘Make in India’ initiative, the South Asian nation plans to develop and support military manufacturing at home. The Indian media reported that Dassault agreed to invest USD 3 billion in India in order to help local firms gain expertise in stealth-capability and radar technologies. India is happy with the outcome of negotiations with Dassault, as the French company has agreed for 50% offset obligation even after indicating that they were in favour of only 30% offset obligation. Now, 50% of the total amount of the deal, estimated to be around USD 4.4 billion for 36 Rafales (including weaponry), will be matched by offsets, involving purchases from the Indian aerospace sector, including tie-ups and co-operation with domestic defence companies to boost the country’s defence production base.

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