The governments negotiations with Dassault on the $20-billion deal to buy 126 medium multi-role combat aircraft have come to a standstill after the French aviation firm informed authorities that it cannot be held responsible for the 108 aircraft to be produced by HAL (Hindustan Aeronautics Ltd).
What started as a point of difference between the defence ministry and Dassault over the role of HAL escalated after the firm told Indian negotiators that the government will have to sign separate contracts one with Dassault for 18 fly-away aircraft and another with HAL,which will produce 108 jets under licence.
Dassault said it will supply manufacturing kits and equipment to HAL on time after which the contract with HAL will take over and Dassault will play no further role.
MoD is learnt to have completely rejected this suggestion and made it clear to Dassault that it will be solely responsible for the sale and delivery of all 126 aircraft. The deal will be only with Dassault and it will be the single point of contact,sources said.
The problem has its roots in the request for proposal document,which mandated that the winning firm will supply 18 aircraft and licence manufacture 108 in India. Also,it specified HAL as the prime integrator for this purpose.
After winning the bid,Dassault sought clarity on HALs role and said it should have the freedom to decide the degree to which it intends to involve HAL. However,MoD clarified in January that HAL was mandated as the prime integrator and would remain so.
This seems to be the cause of the trouble,sources said,as none of the bidders held any discussions with HAL before submitting bids. Therefore,HAL-related issues were possibly not factored into the bids and to now work out the terms and conditions with HAL could prove tough.
It is learnt that Dassault has been at it for a while,but time is beginning to run out with sources indicating that MoD does not want this to linger beyond this month.