New Delhi: The government has cleared the much anticipated deal with France for 36 Rafale fighter jets which will cost 7.878 billion Euros and will be signed on Friday in the presence of French Defence Minister Jean Yves Le Drian.
Defence sources said that the deal for the aircraft, the first fighter jet deal in 20 years, comes with a saving of nearly 750 million Euros when compared to the UPA era one, which was scrapped by the Narendra Modi government, besides a 50% offset clause.
This means business worth at least three billion Euros for Indian companies, both big and small. The deal is expected to generate hundreds of jobs in India through offsets.
The Rafale fighter jets, deliveries of which will start in 36 months and finished in 66 months from the date contract is inked, comes equipped with state-of-the-art missiles like Meteor and Scalp that will give the Indian Air Force (IAF) a capability that had been sorely missing in its arsenal.
Sources said the government today formally cleared the Inter Governmental Agreement to be signed on Friday in the presence of Le Drian, who arrives tomorrow evening, along with the CEOs of Dassault Aviation, Thales and MBDA and top government officials.
The contract for the deal was already cleared by the Cabinet Committee on Security earlier. The price of the contract was fixed in May, sources said.
Sources said that the “vanila price” (just the 36 aircraft) is about 3.42 billion Euros. The armaments cost about 710 million Euros while changes specific to India, including the integration of Israeli helmet mounted displays, will cost 1700 million Euros.
The remaining cost includes spare parts and maintenance among other things.
Especially, the Beyond Visual Range (BVR) Meteor air-to-air missile with a range in excess of 150 km makes the Rafale an important strategic weapon for the air force.
Its integration on the Rafale jets will mean the air force can hit targets inside both Pakistan and across the northern and eastern borders while still staying within India’s own territorial boundary.
Pakistan currently has only a BVR with an 80 km range.
During the Kargil war, India used a BVR of 50 km while Pakistan had none. With the Meteor, the balance of power in the air space has turned in India’s favour.
Scalp, a long-range air-to-ground cruise missile with a range in excess of 300 km, also gives the air force an edge over its adversaries.
The tough negotiations by the Ministry of Defence-IAF team has managed to extract many concessions and discounts from the French before arriving at a price that is almost 750 million Euros less than what was being quoted by the French side in January 2016.
This was when the commercial negotiations gathered pace, almost seven months after Prime Minister Narendra Modi announced India’s intention to buy 36 Rafales, off the shelf from France, during his trip to Paris in April 2015.