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India signs inter-governmental pact with France to buy 36 Rafale combat jets

Prime Minister Narendra Modi said said that an intergovernmental agreement has been signed to buy 36 Rafale combat jets from France. However, some “financial issues” regarding deal are yet to be sorted between both the countries. Modi said things will be sorted out soon.

inter-governmentalModi had, during his visit to Paris last year, announced India’s intention to purchase 36 Rafale medium multi-role combat aircraft built by the French aerospace major Dassault. The deal is valued at around Rs. 60,000 crore.

“We are very happy that we have formed an agreement for purchase of 36 Rafale aircraft with France,” Modi said at a joint address with French President Francois Hollande after 13 agreements including the Rafale pact were signed.

This inter-governmental agreement follows the government-to-government deal struck by Modi to buy 36 Rafale fighter jets from Dassault Aviation SA during his visit to France in April.

Modi’s move cut short the lengthy arms procurement process that was stuck in talks with Dassault Aviation since 2012.

“The deal appears to be inching forward for sure. The progress appears to have been made. However, outcome is still awaited. The delay in outcome is causing confusion in industrial participation programmes that need to be effected on the ground,” said Rahul Gangal, a partner at consulting firm Roland Berger Strategy Consultants.

But Hollande and his host, Narendra Modi, both said further talks were needed to finalise terms of the government-to-government deal, which the Indian prime minister had announced when he visited France last spring.

Hollande described the deal on Rafale as “a decisive step”, adding, “There remain financial issues which will be sorted out in a couple of days.”

Both leaders played up their interest in cooperation in the fight against international militant groups, with Hollande saying France and its allies would strike “again and again” against Islamic State.

“ISIS is provoking us in the worst possible way,” Hollande said, citing the widely used acronym for Islamic State, which controls parts of Syria and Iraq, and was behind several attacks on Paris in November that killed 130 people.

Addressing businessmen at industry lobby FICCI, French finance minister Michel Sapin said companies from his country will invest $10 billion in India over the next five years, chiefly in the industrial sector.

“Over the last five years, French companies have invested more than $1 billion per year in India. We estimate that they will continue to invest at least $10 billion over the next five years.”

“The majority of these investments are meant for the industrial sector, which makes France the major player in Prime Minister Modi’s ‘Make in India’ programme,” Sapin said.

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