Budget Woes Stalls India's Rafale Purchase Until Next Year

India will not sign a $20 billion deal to acquire fighter jets for the Indian Air Force till the next fiscal year, Defence Minister A.K. Antony confirmed today, indicating it would be left to the next government to finalize the purchase.

“It has to wait for the next financial year starting 1 April,” Antony was quoted as saying by Livemint.

India does not have the budget to buy the jets, Antony said. “Ninety-two per cent of our budget has already been used, with only 8% left,” he said.

India in January 2012 decided to buy 126 Rafale fighter jets from France’s Dassault Aviation after an extensive auction process, but the discussions have been delayed over various issues. In October, Reuters reported the deal was to be finalized by March.

Another reason for the delay in the award of the contract relates to life cycle costs. “MMRCA (medium multi-role combat aircraft) will materialize, only that (it will) not (in) this financial year but next financial year,” Antony said when asked if the government would buy Russian Sukhoi jets if the Rafale deal does not go through. “The negotiations on life cycle costs are continuing. I hope we are able to close it in next financial year.”

India is likely to hold its national election in April-May and since the election code of conduct is expected to kick-in by early March the deal is unlikely to be signed by the present government. No major policy or contracts can be announced 45 days before an election.