France 'marginally' reduces Rafale price, India asks for more

New Delhi: France has "marginally" reduced the price of Rafale combat planes but India is seeking more and the multi-billion dollar deal could take at least another six weeks to be finalised, government sources said on Wednesday.

The price for 36 Rafales, as per the UPA tender, keeping the cost escalation and dollar rate in view, comes to over over Rs 66,000 crore (around 9 billion Euros), they said. This 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)," the sources said, adding that the actual price negotiations only started from January 21.

"They have come down from the original price as per the earlier tender of the UPA but we expect more," they said. Asked about plane price being offered by France now, they said it has been reduced "marginally".

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. France had initially not agreed to it but the roadblock was removed in August in 2015 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.