You are here: Home » Current Affairs » News » National
Business Standard

Rafale deal talks yet to be concluded: Manohar Parrikar | A brief timeline

Speculation over deal's closure continues after law ministry raises objections; defence minster says negotiations still on

BS Web Team  |  New Delhi 

A Rafale fighter jet flies over the factory of French aircraft manufacturer Dassault Aviation in Merignac near Bordeaux during a visit by the French President.
A Rafale fighter jet flies over the factory of French aircraft manufacturer Dassault Aviation in Merignac near Bordeaux during a visit by the French President.

The multi-billion dollar deal to purchase 36 jets from France's Dassault made headlines on Tuesday with after a Parliamentary panel expressed its ‘distress’ over the delay in completing the agreement.

Mystery around the deal increased when Defence Minister Manohar Parrikar said that the discussions were still going on. The minister informed the Rajya Sabha regarding the same in a written reply.

Interestingly, the statement comes weeks after the minister had said that the discussions were in an ‘advanced stage’ and the Centre was likely to ‘close it quite soon.’ That statement, in turn, came after the Bharatiya Janata Party announced on its Facebook page that the deal had been finalised at $8.8 billion.

On Tuesday, the Law Ministry put a fresh spanner in the works when it raised objections over certain aspects of the deal. It was reported earlier that the ministry had objected to several clauses in the deal on the grounds that these compromised the interest.

Here is how the deal has progressed since the BJP-led Democratic Alliance came to power:

1) July 2014: Less than two months after the new government came to power, France’s Minister for Foreign Affairs and International Development Laurent Fabius met Prime Minister Modi to push for the deal.

At that time, the deal was still for 126 aircraft, and French aviation major Dassault had emerged as the winner in the tender in 2012, beating Eurofighter’s Typhoon and Swedish Saab’s Gripen-D light fighter. A month before the scheduled meeting, Dassault Aviation Chief Executive Eric Trappier had said that the company was hopeful of closing the deal by end 2014.

2) December 2014: India and France agreed to iron out issues like pricing and a guarantee clause for Dassault to fast-track the deal for 126 fighter jets.

The issue was discussed during delegation-level talks between Parrikar and his French counterpart, Jean-Yves Le Drian.

According to reports at the time, the deal was stuck over pricing and work-sharing. Additionally, Dassault was reported to be reluctant to stand guarantee for 108 fighters to be built by Hindustan Aeronautics Ltd (HAL) as far as liquidity damages and timelines for production were concerned.

Later the same month, Parliament’s standing committee on defence sharply criticised the allocation of funds to the IAF, which didn’t have any funding for purchases like the Rafale fighter.

3) January 2015: The Rafale deal ran into rough weather as Parrikar conceded there were serious problems in negotiating the purchase of the fighters. The Defence Minister said that additional Sukhoi-30MKI fighters, which HAL builds in Nashik, were adequate for the IAF in case it was decided not to procure the Rafale.

A fortnight later, he again said the Indian-built Russian fighter offered a viable alternative to Rafale, especially given that HAL was upgrading and overhauling the fighter and equipping it with state-of-the-art electronic warfare systems.

Following his comments, France decided to send an empowered delegation later that month to "solve all remaining issues" to salvage the contract.

4) February 2015: A senior ministry of defence (MoD) sources said that the proposal to buy Rafales was “effectively dead”.

During three years of negotiations between Dassault and MoD officials in the so-called "contract negotiation committee" (CNC), it had emerged that Dassault's bid was actually higher than that of the Eurofighter Typhoon, not lower as the MoD had announced on January 31, 2012.

Dassault replied that its pricing had remained the same from Day One and that it had not wavered from the request for proposal for the deal.

Amid the growing uncertainty, Parrikar and French Defence Minister Jean-Yves Le Drian held talks in a last-ditch effort to salvage the deal.

5) April 2015: Prime Minister Modi's trip to France brought some major developments in the deal.

On April 10, 2015, setting aside the norms of New Delhi's procurement rulebooks, India and France announced that the IAF would buy 36 Rafale fighters in fly-away condition. These would equip two IAF squadrons with 18 aircraft each.

6) May 2015: India and France decided to set up teams to work out details of the acquisition of 36 Rafale fighter jets in fly-away condition in a "time bound manner". The decision came following the meeting between Le Drian and Parrikar.

France reportedly offered India the 36 jets at the same price as its own armed forces.

As the month came to close, Parrikar confirmed that the original deal for 126 aircraft was effectively dead. Terming the proposed deal for 126 Rafale fighter jets as "economically unviable" and not required, Parrikar said the government would buy only 36 aircraft.

7) June 2015: French Defence Minister Jean-Yves Le Drian said the deal would be finalised within "two to three months".

8) January 2016: Nearly two years after the original announcement made by Modi and Hollande, French Ambassador Francois Richier said a "complex negotiation" process was going on for the deal.

Additionally, President Hollande said during a three-day visit to India that further discussions were needed on a prior inter-governmental agreement. During the trip, India signed an inter-governmental agreement with France to buy the planes.

However, leaders of both countries said that there was still work to do to finalise financial terms.

9) February 2016: It emerged that issues such as pricing still remained unresolved. Parrikar stated that negotiations were deadlocked on the issue of price, and that no deal would be signed until the price was right.

10) March 2016: The Union Law Ministry raised questions over several clauses in the multi-billion deal, saying they 'compromise' India’s interests.

Things seemed to take a turn for the worse, when a senior French official told Business Standard on condition of anonymity: “If some people in the MoD (the ministry of defence) do not want to allow the Rafale deal to go through, so be it. We are currently building it for Egypt and Qatar, and we could have another customer in Malaysia.”

As the month came to a close, Parrikar admitted that the pace of negotiation with France was "not enough". However, he did express hope that the deal would be concluded soon.

11) April 2016: Reports emerged that the negotiations had entered the "final stages" as both India and France managed to narrow down their differences over the pricing.

"The effort is to bring down the price to less than Euros 8 billion (Rs 59,000 crore)," these sources said, adding that the French side had pretty much agreed on the price.

On April 19, Minister of State for Defence Rao Inderjit Singh said that most of the hitches in the multi-billion Euro deal had been addressed and the remainder would be cleared in the next meeting of the Defence Acquisition Council scheduled for April 21.

First Published: Wed, May 04 2016. 11:05 IST
RECOMMENDED FOR YOU