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France 'marginally' reduces price of Rafale jets: Report

India TV Business Desk 27 Jan 2016, 21:17:29 IST
India TV Business Desk

New Delhi: The multi-billion dollar deal over the sale of 36 French Rafale combat aircraft to India could take longer with sources indicating that India was pressing for more after the “marginal” let off in price by the French in the deal.

According to government sources, the price for 36 Rafales, as per the UPA tender, keeping the cost escalation and dollar rate in view, comes to over Rs 66,000 crore (around 9 billion Euros), they said. This, India wants to bring down to around Euro 8 billion.

The tender cost of Euro 9 billion includes the cost involved in making changes that India has sought in the aircraft, including Israeli helmet-mounted display and some specific weaponry, among others.

"The effort is to bring down the price to around Euros 8 billion (over Rs 59,000 crore)," PTI quoted government sources as saying.

"They have come down from the original price as per the earlier tender of the UPA but we expect more," they said, adding that the actual price negotiations only started from January 21.

Also Read: 'Complex negotiations' underway: French Ambassador on Rafale deal

Asked about plane price being offered by the French now, they said it has been reduced "marginally".

The report further quotes sources as saying that the finalisation of the deal could take at least another six weeks.

Prime Minister Narendra Modi and French President Francois Hollande Modi had agreed to conclude an inter-governmental agreement for supply of the aircraft "on terms that would be better than conveyed by Dassault Aviation as part of a separate process underway", which was the MMRCA (medium multi-role combat aircraft) tender.

Another point under discussion is the payment of advance which India will have to make. "At least 50 per cent advance will have to be made, including 15 per cent immediate payment," the sources said, adding that details on how the French government will stand guarantee was being worked out.

"Also, the document (inter-governmental agreement) will need legal vetting and clearance from the Cabinet Committee on Security," the sources said.

They also said that 50 per cent offset will apply to the deal. The French had initially not agreed to it but the roadblock was removed in August last year after Modi spoke to Hollande over phone.

Following the MoU signed on January 25 during Hollande's visit, Dassault Aviation, the manufacturer of Rafale, had said in a statement, "We are very pleased with this progress, and actively supporting French authorities in their efforts to finalize a complete agreement within the next four weeks."

They said the agreement will pave the way for the "conclusion of a contract" for the sale of 36 Rafale fighters to India.