Rafale deal: France rejects bank guarantee, awaits India’s reply

The initial French offer for the 36 fighters made by Dassault Aviation was for around Euro 10.5 billion, following which the Indian side asked for a 30 per cent cut.

Written by Sushant Singh | New Delhi | Updated: May 25, 2016 12:51 pm
india Rafale deal, Rafale jets deal, india france Rafale, india france Rafale price negotiations, india france Rafale deal, Rafale deal india, india news The first aircraft is scheduled to be supplied within 36 months of the signing of the deal while the last aircraft will reach India in seven years.

India is yet to respond, either verbally or in writing, to a letter sent to Defence Minister Manohar Parrikar on April 1 by his French counterpart Jean-Yves Le Drian, who made what is said to be the “best offer” his country can make in a government-to-government deal for 36 Rafale fighter jets, sources told The Indian Express.

The initial French offer for the 36 fighters made by Dassault Aviation was for around Euro 10.5 billion, following which the Indian side asked for a 30 per cent cut. The latest offer, made in the French minister’s letter, is of around Euro 7.8 billion, said sources.

Days before the letter was sent, the French side had rejected an Indian request for a sovereign guarantee or a bank guarantee for the deal, and instead offered to provide a “comfort letter” from their prime minister.

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As reported by The Indian Express on March 14, the law ministry had raised objections over France’s refusal to provide any bank guarantees. Asked about Le Drian’s letter, the defence ministry said it does not comment on ongoing negotiations between two governments.

Sources said there was “a significant difference” between the two offers. The original offer included a ten-year product support period, which has been brought down to five years, they said. The latest figure also does not include the cost of setting up infrastructure at two airbases for two Rafale squadrons, said sources.

It’s learnt that one of the bases is proposed to be established in the east, to tackle the Chinese threat, and the other in the north.

India will have to make a payment of 15 per cent of the total cost at the time of signing the deal, said sources. The first aircraft is scheduled to be supplied within 36 months of the signing of the deal while the last aircraft will reach India in seven years.

”Even though the Indian configuration is different from what the French air force flies, calculations show that the French government has agreed to provide a discount of around 7-8 per cent over its buying price. It will have to compensate Dassault for it in some way,” said sources.

The IAF has demanded a fighter configuration different from the one flown by the French air force, including an Israeli helmet-mounted camera and a third-party weapons system.

Price negotiations for the jets have been complicated by deals signed by France for selling the fighter to Egypt and Qatar. Sources said it would not be possible for France to go too far below those prices. Unlike India, Egypt and Qatar have opted for the same configuration as Dassault supplies to the French air force.

Sources also said that there was a small window available for the two sides to close the deal. French Ambassador François Richier, who has been closely involved with the deal, is ending his Delhi stint in June. It would take a few months for his replacement to present his credentials and understand the intricacies of the deal, they said.

The French establishment is also expected to go into election mode later this year with presidential polls scheduled next year.

India had announced its decision to buy the 36 fighters from France during Prime Minister Narendra Modi’s visit to Paris last April. This followed the selection of the French fighter in a decade-long competitive bid for India’s next Medium Multi Role Combat Aircraft (MMRCA). The 126-aircraft MMRCA tender was withdrawn by the NDA government soon after the announcement of the 36 fighter deal in Paris.

Technical negotiations were completed earlier this year and the deal was expected to be signed in January when French President Francois Hollande was the chief guest at the Republic Day celebrations. But both sides were unable to conclude negotiations over price by then.

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  1. C
    Chander Pal
    May 25, 2016 at 9:59 am
    You want to oppose for no reasons. You are welcome to be anti Modi, but for God sake be a proud Nationalist
    Reply
    1. Y
      Yakobi
      May 25, 2016 at 5:57 am
      It is called hindu indecisive mind, in hinduism degradation of capabilities, due to hinduism inferior belief in hinduism racism, way of children of acclaimed children of hindu stupid monkeys by faith.
      Reply
      1. Y
        Yakobi
        May 25, 2016 at 5:51 am
        It takes a man to fly a fast jet, and it will be no benefit but, wastage of badly needed money to build, basic need of a least developed land, the toilets, without men, but hindus hijras as pilots of the fast planes. by turning them, in to flying coffins, same as they have done with least fast Russian jest, Mig 21 s.
        Reply
        1. Y
          Yakobi
          May 25, 2016 at 6:46 am
          Pay back time is getting closer by the day, can not wait, for hindus criminals to react, with force, but they are good at nothing, but hind bar k like a hindu mad do g.
          Reply
          1. Y
            Yakobi
            May 25, 2016 at 6:48 am
            Shoot straight, hindus chickens, keep on crying, till justice is served on hindus criminals by faith.
            Reply
            1. Y
              Yakobi
              May 25, 2016 at 6:55 am
              Welcome, nice to hear from you again, just having fun buddy, with hindus jo jos.
              Reply
              1. Y
                Yakobi
                May 25, 2016 at 7:03 am
                hinduism, joke of the day.
                Reply
                1. M
                  MyTake
                  May 25, 2016 at 1:32 am
                  Looking at how Indian authorities can not even catch a thief (Augusta) how others can trust India!
                  Reply
                  1. O
                    Omar S
                    Jul 7, 2016 at 9:58 pm
                    Haha.. And the BJP is doing something? The deal has been cut down to 36 planes and still hasn't been signed. It's been two years and the IAF is actually back to square one because they have to look for the other 90 planes that are not being ordered.
                    Reply
                    1. A
                      Amit T.
                      May 25, 2016 at 6:30 am
                      I really your comments.. all the time!! :D Yakobi ho akbar...
                      Reply
                      1. A
                        Avinash
                        May 25, 2016 at 3:35 pm
                        The effort which Govts have put behind such deals - would have set up a research and development center itself in India - thus moving on the path of self sufficiency.
                        Reply
                        1. A
                          avi
                          May 25, 2016 at 4:01 am
                          If French are proving hard to get ,walk away from this never ending drama ! They can sell their planes elsewhere !!!
                          Reply
                          1. B
                            BHARADWAJ
                            Jun 16, 2016 at 12:33 pm
                            One should not take a hasty decision, since the security and national interest is involved. Purchase of 36 Rafale fighter planes from France, was decided long ago and the deal was clinched during their President's visit in Jan, this year. Hope Mr.Modi and Mr.Parikar will take a final decision on this and the controvesy over the issue will be laid to rest.
                            Reply
                            1. S
                              S.Gonesh
                              May 25, 2016 at 4:55 am
                              Stop this deal. It has no use, because it takes too much time. Hindustan,lt;br/gt;Russian planes are the best. India start thinking swadeshi!
                              Reply
                              1. K
                                Kaliyug
                                May 25, 2016 at 1:58 am
                                They can keep their RAFAIL aircraft and sell to whoever is foolish enough to buy it. The French need India's business badly, so India should just distance themselves from the deal.
                                Reply
                                1. G
                                  Ganesh Dore
                                  May 25, 2016 at 12:26 am
                                  Wasnt the bank guarantee requirement in the tender ??? Along with progress payments terms ?????
                                  Reply
                                  1. H
                                    Harishankar
                                    May 26, 2016 at 2:45 am
                                    Waste of money - lt;br/gt;lt;br/gt;The government should invest 1/2 the money with Indian companies like LandT, Walchandnagar, to develop technology with a goal to deliver similar capability in a 8 year timeframe -
                                    Reply
                                    1. I
                                      imran
                                      Aug 1, 2016 at 3:53 pm
                                      Indian bureaucracy at its best , will this deal ever p ?? by the time it pes the need would have been increase by x percent . From what i know raising squadrans need long term planing and its been more than eternal . By now iaf should have had atleast 40 squadrons as against 36 and with migs in the mix i am sure the actual number is much lower
                                      Reply
                                      1. B
                                        babu
                                        May 25, 2016 at 1:21 am
                                        After re Colonization of india with the help of s o b chandra swami the rss pi m p who helped foreigner to kill rajive hi 1 of 13 jumbo jet indian gold which india have to ship to rss master and creater England
                                        Reply
                                        1. B
                                          babu
                                          May 25, 2016 at 8:56 pm
                                          They knows the reality of this pm in chaddi
                                          Reply
                                          1. S
                                            Sagittarius Sengupta
                                            May 25, 2016 at 3:00 pm
                                            Put the deal in the back burner for the time being. Negotiate with Russia to buy latest Sukhoi instead
                                            Reply
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