Indian Defense Minister Manohar Parrikar hosted his French counterpart in New Delhi earlier this week. The two ministers agreed to put the issue of concluding a deal on India’s acquisition of 126 French Rafale fighter jets on a “fast track.” The deal is expected to cost India upwards of $15 billion and will fulfill India’s Medium Multi-Role Combat Aircraft (MMRCA) contract which was awarded to France’s Dassault Aviation for the Rafale fighter in 2011 over several other bidders. Parrikar and French Defense Minister Yves Le Drian agreed to accelerate negotiations after over two years of delays. Le Drian described his meeting with Parrikar as “positive.”
“All issues related to defense were discussed, including the Rafale,” Indian defense ministry spokesman Sitanshu Kar said. “Both sides decided to adopt a fast-track approach wherever there are differences.” “We can say this morning that the negotiations are on the cusp of conclusion,” a French official anonymously told the Associated Press. Additionally, an Indian defense official told The Indian Express that “The two delegations met and talks were held in a cordial manner. Both the sides agreed to take forward the partnership between the two countries that was envisaged in 1998. All the issues related to defence cooperation were discussed.”
The meeting between Parrikar and Le Drian puts to rest rumors that the MMRCA contract could be scrapped altogether given a series of disagreements and delays. One of the main issues holding back the deal was the issue of joint development and technology transfer. The Indian side had insisted on having Hindustan Aeronautics Limited (HAL) manufacture a portion of the jets as part of the contract. This would require a formal transfer of technology and licensing which the French side was reluctant to agree to initially. According to reports in the Indian press following the meeting between the two defense ministers, India’s HAL will manufacture 108 of the 126 Rafale jets with the remaining 18 jets being manufactured in France.
Another issue holding back the conclusion of the deal is French manufacturer Dassault Aviation’s unwillingness to be held liable for jets manufactured in India. Dassault refuses to take on “full responsibility” for the jets that would be manufactured by HAL, according to reports by the Times of India and other Indian sources. According to one anonymous Indian official who spoke to the Times of India following the talks between the two defense ministers, “Dassault so far is unwilling to give the commitment for the 108 fighters as far as liquidity damages and timelines are concerned.” For the deal to be successfully concluded, the Indian government will have to reach some sort of agreement with Dassault over this issue.
India has stressed joint manufacturing in ongoing defense negotiations with other exporters, including Russia and the United States. India, which is the largest weapons importer in the world, continues to modernize its military against perceived threats from both Pakistan and China. India’s Bharatiya Janata Party-led government has said that it will prioritize India’s domestic defense industry as part of the country’s defense modernization efforts. As a result, joint manufacturing and technology transfers are two issues that Indian officials have focused on in negotiations with their counterparts. Additionally, Indian Prime Minister Narendra Modi recently announced a ‘Make in India’ initiative that set out to increase the productivity of India’s defense industry.
France, for its part, has had trouble marketing its Rafale jets abroad. The jets were scheduled to be sold to prospective buyers including Brazil, Switzerland, and Libya. These deals ultimately were called off with buyers citing the high initial and maintenance costs of the Rafale. As a result, French negotiators are keen to conclude a deal with India for these jets.
India views France as a “strategic partner.” In addition to the Rafale negotiations, Parrikar and Le Drian vowed to increase cooperation on counter-terrorism and maritime security. India and France will hold aero-naval exercises in the Indian Ocean in April 2015, according to the Times of India.