The government is now getting all set to ink the long-awaited contract for the direct acquisition of 36 Rafale fighter jets from France for the IAF, which is grappling with just 33 fighter squadrons when at least 42 are needed to tackle the collusive threat from China and Pakistan.
"The contract and the inter-governmental agreement are now being fine-tuned. The deal is in the final stages now," said government sources on Monday. Sources said the two countries had arrived at the figure of around Rs 55,000 crore (7.3 billion Euros), which includes the cost of the 36 fighters, their weapons, spares and maintenance package, after extensive negotiations since the proposed government-to-government deal was announced during the Modi-Hollande summit in Paris in April 2015.
The NDA government had then cited IAF's "critical operational necessity" as well as the need to cut time and costs to go in for the direct acquisition of 36 Rafales after scrapping the original but deadlocked $20 billion MMRCA+ (medium multi-role combat aircraft) project to acquire 126 fighters. Under the MMRCA project, the first 18 fighters were to be delivered "off-the-shelf", with the rest being manufactured in India after technology transfer. Under the new deal for 36 Rafales, the fighters will now be directly delivered to India from 2019 onwards.
While the jets will not be made in India, the deal does have a 50% offsets clause, as was the case in the MMRCA project, under which France will have to plough half of the actual contract value back into India.
The 36 jets are to be delivered in the same configuration as were tested and approved by the IAF during extensive field trials in the MMRCA project, where the French fighter had emerged the winner after beating the Eurofighter Typhoon, American F-16 and F/A-18, Swedish Gripen and Russian miG-35. While the current procurement is for only 36 Rafales, less than one-third of the 126 envisaged under the MMRCA project, the new contract will have the mandatory clause for acquisition of another 18 jets under the 50% follow-on order option at the same price.
Apart from the hard bargaining on the price of the 36 Rafales, France's refusal to give sovereign guarantee or bank guarantee for the deal had delayed its finalisation for some time. Defence minister Manohar Parrikar had earlier told TOI: "All issues will be addressed in the inter-governmental agreement (IGA) to be inked. The IGA will cover everything, including the guarantee. It will ensure that anything covered under it has to be executed by the two governments.
" The MMRCA project was scrapped last year after persisting deadlock over Dassault's refusal to take "full responsibility" for the 108 jets to be made by HAL as well as the stiff hike in its production costs here. The NDA government had then concurrently decided to go in for direct purchase of 36 Rafales during the Modi-Hollande summit in Paris.