India, France Close 36 Aircraft Rafale Deal for 7.8 Billion Euro with Offsets

India and France have negotiated a deal for 36 Dassault fighter aircraft worth 7.8 billion euros with close to 2.5 billion euros in offsets to be invested in Indian companies.

Well-placed sources told defenseworld.net that an agreement would be inked in April between the French and Indian defence ministers and France would start delivering the first few aircraft in 18-20 months from the date of agreement.

Dassault has already announced that it will raise production of the Rafale from the current two aircraft per month to three should it land the Indian contract. With that target India should get its full quota of 36 aircraft in about three years’ time from the contract signature.

The deal also includes maintenance, training and technical support for the product lifetime. For the first time, India's state owned Hindustan Aeronautics Limited will not be involved in a fighter aircraft project in India.

Sources said the offsets would be in high tech areas connected to fighter aircraft such as metallurgy, radars, electronics and weapons. Other than Dassult, its principal sub-contractors, Thales and MBDA would also be involved in the offsets program. Thales supplies the radar, avionics and other electronics while MBDA provides the missiles to be mounted on the aircraft.

Meanwhile, NDTV reported that  France initially sought nearly 12 billion dollars for the sale of 36 fighters complete with weapon systems. India has closed the deal nearly 3 billion dollars below France's asking price.

Prime Minister Narendra Modi during a visit to Paris last year confirmed India's order of 36 read-to-fly jets. Before that, the Defence Ministry had sanctioned the purchase of 120 planes, but the deal was scaled down dramatically after both sides were unable for years to agree on the unit price and the assembling of the planes in India.

The Indian Air Force has stressed it needs to start replacing its ageing jet fleet from 2017 to effectively check the capabilities of Pakistan and China, according to the Indian news channel.