India on verge of deal for French Rafale jets - sources

PARIS: India will purchase 36 of Dassault Aviation's French-manufactured Rafale fighter jets, Prime Minister Narendra Modi said on Friday during a visit to Paris. The terms and conditions of the contract have yet to be finalised, Modi said at a joint press conference with French President Francois Hollande.

Le Monde newspaper reported earlier on Friday that talks centred on the purchase of 63 Rafale jets for 7.2 billion euros ($7.7 billion). A French diplomatic source said there could be an announcement as early as Friday evening but the deal could involve fewer planes: more than the 24 France sold to Egypt in February but fewer than 50.

French President Francois Hollande (R) attends a meeting with Indian Prime Minister Narendra Modi (L) at the Elysee Palace in Paris, France, 10 April 2015. PHOTO: REUTERS

"There were discussions that lasted throughout the night," said a French government source, who declined to be identified due to the sensitivity of the talks. "We are probably in the final straight. We have never been so close."

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Two other French sources said talks were continuing throughout Friday. Indian officials confirmed a major push to reach an agreement to buy the Rafales during Prime Minister Narendra Modi's visit.

Talks have been going on for more than three years amid differences over pricing and local assembly for the planes, which are manufactured by Dassault Aviation. The firm, whose shares were up 3.6 percent by 1526 GMT, declined to comment, as did the French presidency and the defence ministry.

The original Indian Rafale contract - for 126 planes including 108 made in India - was worth $12 billion but was estimated to have increased to $20 billion, primarily because of the implications of building some of the jets in India. It is not clear how the Paris talks fit into that deal.

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Analysts say the deal with Egypt may have helped break the logjam in negotiations with other customers since they are now on notice that if they want to have Rafales they may have to wait for them. India's military says it needs to start replacing its ageing jet fleet from 2017.

 A Rafale fighter jet performs during the Aero India air show at Yelahanka air base in Bengaluru February 18, 2015. PHOTO: Reuters

The Hindustan Times said a direct government-to-government contract for a smaller number of planes was one possible outcome because of problems linked to localising production of most of the planes in India. Nitin Ghokale, a widely watched defence blogger, said the talks focused on buying between 60 and 63 jets.

Indian Prime Minister Narendra Modi (L) and French President Francois Hollande (R) leave the Elysee palace towards the hotel Marigny in Paris, April 10, 2015. PHOTO: REUTERS

A source at the Indian defence ministry said a "serious effort" was under way to reach a solution. But another Indian official, who requested anonymity, described a possible contract announcement as "a bit of hype."

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"If things work out and terms are more attractive than earlier,
then maybe (we will reach) an understanding." Modi is in France for a two-day state visit. There is due to be a signing ceremony for various contracts late on Friday and a news conference with President Francois Hollande".