€7.25-billion: France makes its ‘best’ price offer for 36 Rafale fighter jets

The Rafale fighter deal that has been stuck for the past several months on pricing issues is likely to move ahead with a new offer from Paris that could see India paying 7.25 billion for 36 new jets. The new offer from France is the lowest price being quoted for the Rafale fighters till now, though a weapons package is to be negotiated separately. Officials involved in the negotiations have told ET that the latest French offer came just over two weeks ago and could be the last price being offered for the Rafale fighter jets that are being procured by India under a government to government deal. This is a substantial cut from the 8.8 billion Euro figure that was being quoted for the deal in BJP circles and was even advertised by its IT department as a major win for the Modi government. Officials say that the negotiations will now only move forward after an Indian response to the offer. The two sides are also negotiating a five-year support package for the fighter jets, down from the ten-year package that was being discussed earlier. Sources say that the weapons package will be signed separately as has been the norm but the original requirement has been pruned. This has been done as several weapons are common with the in service Mirage fighter fleet. On April 21, Parrikar had said that the Rafale deal is “in quite an advanced stage and we intend to close it quite soon”. The deal has to be first approved by the defence ministry followed by which it would go for a go ahead by the Cabinet. The offer for 7.25 billion euros for the 36 aircraft would also include an offset clause that would see French companies like Dassault and Thales investing in the Indian defence and security sector. France agreed to a 50 percent offset clause as a special case for India after the direct intervention of the Indian PMO, sources said. The investment of over 3 billion euros would be a boost for Indian defence and aerospace companies. Several Indian companies are partnering with French companies for the offsets, including a plan to assemble aircraft parts and even a low cost executive jet in India. Several aircraft technologies, including a special radar absorbing paint are likely to be transferred as well through the defence research and development organization.