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Will Modi's France visit help save the Rafale deal?

Source: PTI
April 07, 2015 18:18 IST
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Suspense continued on Tuesday over whether the issue of Rafale fighter deal, which has been stuck over cost, will figure in talks that Prime Minister Narendra Modi will have with French President Francois Hollande during his visit beginning on Thursday.

French Ambassador Francois Richier, while addressing a press conference on Modi’s visit, was evasive to questions over the multi-billion dollar deal which has been held up for long.

However, sources said “negotiations are on” for the deal under which French company Dassault Aviation will supply 126 Rafale fighter planes.

Richier said French companies, including those in the field of defence, are keen to participate in the ‘Make in India’ programme and the fate of Rafale deal will be a key element in this.

Rafale was selected by India from among five bidders in 2012 since it was the lowest bidder.

Indian government officials say that while the deal was initially for about Rs 42,000 crore, French are seeking a higher price now. This, the Indian officials say, has put the price at a “little more than double the cost”.

India is insisting that Dassault Aviation cannot renege on the Request for Proposal clauses, which it had initially agreed to.

Even at political level, India has categorically told the French side that it must stick to the RFP, in which Dassault was the lowest bidder and hence was selected for the contract. “The ball is in France’s court,” an Indian official had said sometime back.

The French Rafale and European Eurofighter Typhoon were the only two left in the race for 126 fighter plane deal after years of tests on technical and other aspects.

Another point of contention is the guarantee clause under which Rafale has to stand guarantee for the planes that would be manufactured by state-owned HAL.

As per the RFP issued in 2007, the first 18 jets are to be imported and the rest 108 manufactured under licence by Hindustan Aeronautics Ltd.

According to the sources, Dassault was reluctant to stand guarantee for the 108 fighters to be built by HAL as far as liquidity damages and timelines for production were concerned.

The Indian Defence Ministry is of the view that the guarantee clause was part of the Air Staff Qualitative Requirements under the RFP.

Dassault had agreed to the ASQR and hence was selected for the deal, the sources maintained.

“How can the ASQR be relaxed? This is not allowed under the Defence Procurement Procedure, 2013,” the sources said.

However, French authorities insist otherwise. Talking about the price and guarantee clause, the sources said all this takes place within the Indian Defence procurement procedure.

“At the conclusion of the competition, the Rafale was selected -- and its competitors eliminated -- on the basis of technical/operational assessment and on the basis of price,” they said.

During his talks in France, Modi is expected to refer to his government’ss ambitious plan of creating 100 smart cities across India and invite French participation.         

The two sides are also expected to discuss cooperation in the field of technology, including space. A new programme of cooperation in the field of space is likely to be signed during the visit. Under it, India will launch French satellites while Indian satellites can be launched from France.

During his visit, Modi will meet the business leaders of France besides the political leadership. He will also visit the Airbus manufacturing base.

He will also visit a memorial set up for Indian soldiers who died while fighting with France in World War-I against Germany. Around 9,000 of them had died in that war and Modi will pay homage to them.

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