India Seeks Further Discount On Rafale, Deal In Final Stages

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India is pushing for a final discount of nearly 1,50,000 Euros in the much-anticipated Rafale fighter jet deal with France even after successfully bringing down the price by nearly two billion Euros.
The French side, however, is adamant on the price it had offered way back in April which comes to about 7.89 billion Euros for the 36 fighter jets in fly away conditions, defense sources said.
The price was brought down from nearly 10 billion Euros, as sought initially, due to various reasons, including the discount offered by the French government and reworking of some of the criteria.
The Indian side is now directly negotiating with the French Embassy rather than the negotiating team, which used to fly down from Paris, as talks are more focussed on price rather than other areas.
"There is a limit till which France can really come down to," a defense source said, adding that the deal is finally set to be inked.
Defense Minister Manohar Parrikar has made it clear that he will bargain for discount to get the best deal for the aircraft which will come as a boost to the depleting strength of the Indian Air Force.
The deal will be signed once the file moves from the Defense Ministry to the Finance and then to the Cabinet Committee on Security.
The deal is unlikely to face bureaucratic delay as the government is keen on getting the fighter jets for Indian Air Force.
The deal comes with the clause of delivering 50 per cent offsets, creating business worth at least 3 billion Euros for smaller Indian companies and creating thousands of new jobs in India through the offsets.
The toughest phase in the negotiations that began in July 2015 - three months after Prime Minister Modi announced in Paris India's plan to purchase 36 Rafale jets - was to get France to agree to 50 per cent offsets in the deal.
Initially, Dassault Aviation, the maker of the combat planes, was willing to agree to reinvest only 30 per cent of the value of its contract in Indian entities to meet the offset obligations.
The French side finally agreed to invest 50 per cent of the value following a phone conversation between Modi and French President Francois Hollande late last year.
France has offered to help India revive the unsuccessful Kaveri engine project for indigenous Tejas aircraft and in a host of other high-end collaboration as part of the offsets in the deal.
The French side has made a 30 per cent offset commitment for military aerospace research and development programmes and the rest 20 per cent for making components of Rafales here.
The offsets will be carried out by French companies Safran, Thales, MBDA and Dassault, all part of the Rafale project.
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