India and France are speeding up negotiations on a $10 billion deal for 126 Rafale aircraft following months of delays because of disagreements over the cost of building them in India, two Indian Defense Ministry officials told Reuters.
India started exclusive talks with French Dassault Aviation’s Rafale for a 126-plane order in January 2012, over the competing Eurofighter Typhoon. The two sides still have to sign a final contract.
The deal is likely to be discussed during a two-day visit by French President Francois Hollande to India beginning on Thursday, but both sides have played down the chances of it being finalised.
The talks have progressed slowly because of differences about how to price technology transfer, sourcing of spares and the selection of an Indian partner, the officials said.
“There are three issues of contention - pricing of transfer of technology, sourcing from India and the joint venture with Hindustan Aeronautics Ltd (HAL),” said a senior official at the ministry, who said negotiations had been delayed by a few months, largely because of those issues.
Another official said the contentious points had been mostly resolved and the deal could be finalised as soon as July.
Dassault declined to comment.
The second official said Dassault had earlier asked India to pay up to $2 billion more for the future upgrading of technology that would be transferred over the 30-year life-cycle of the deal.
French Foreign Minister Laurent Fabius said on Sunday that talks with India to complete the long-awaited first export order for Rafale were looking up. At an air show in Bangalore last week, India pledged not to let defense cuts stand in the way of efforts to finalise the deal.