India, France ink MoU on purchase of Rafale jets

New Delhi : India and France on Monday inked an MoU on the sale of 36 French fighter jets, Rafale, but were unable to seal the deal due to ongoing negotiations on price.
This MoU was among the 14 pacts signed after wide-ranging talks between Prime Minister Narendra Modi and visiting French President Francois Hollande, which focused on ways to enhance cooperation in counter-terrorism, security and civil nuclear energy.
“…Leaving out financial aspect, India and France have signed Inter-Governmental Agreement on purchase of 36 Rafale fighter jets. We expect that even the financial aspects pertaining to purchase of Rafale jets will be resolved as soon as possible,” Modi said at a joint press event with Hollande.
Terming the signing of the IGA as a “decisive” step, the French President said there are some financial issues that will be sorted out in a “couple of days”. The two countries are in negotiation for 36 Rafale fighter jets in fly-away condition since the deal was announced by Modi in April during his visit to France. However, the final deal is yet to be sealed as both sides are still negotiating the price. The deal is estimated to cost about Rs 59,000 crore. Foreign Secretary S Jaishankar said, “What was signed today was an MoU and, when the financial part of it is settled, then obviously the IGA in its entirety will be concluded”.Top government sources said an IGA will be signed once the prices have been finalized, which they hoped would take another four weeks. Sources said the price for 36 Rafales, as per the UPA tender, keeping the cost escalation and dollar rate in mind, comes to a little over Rs 65,000 crore. This includes the cost involved in making changes 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 less than Euros 8 billion (Rs 59,000 crore),” the sources said, adding the actual price negotiations only started from January 21. 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 the French government will stand guarantee.Apart from defence cooperation, the talks between the two leaders primarily focused on ways to boost counter-terrorism efforts in the aftermath of attack in Paris in November last and Pathankot terror strikes earlier this month.”From Paris to Pathankot, we saw the gruesome face of the common challenge of terrorism…I also commend the strength of your resolve and action these terrorist attacks. President Hollande and I have agreed to scale up the range of our counter-terrorism cooperation in a manner that helps us to tangibly mitigate and reduce the threat of extremism and terrorism to our societies.