India, France sign Rafale plane accord but haggle over price
New Delhi, January 25
India signed an inter-governmental pact today to buy 36 French-built Rafale fighter planes, but the leaders of both countries said there was still work to do to finalise financial terms after months of talks.
The deal, worth an estimated $9 billion, was to have been the centrepiece of a visit to India by French President Francois Hollande, invited as guest of honour for Tuesday’s Republic Day parade.
But Hollande and his host, Narendra Modi, both said further talks were needed to finalise the terms of the 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.”
However, Dassault Aviation, the aircraft-maker, said in a statement it expected a complete agreement on the planes in four weeks’ time.
Both leaders played up their interest in cooperating in the fight against international militant groups, with Hollande saying France and its allies would strike ‘again and again’ against Islamic State.
Hollande and Modi stepped into Rafale deal last year, ordering government-to-government talks after commercial negotiations with Dassault had collapsed. The leaders agreed to scale back original plan for 126 Rafale planes to just 36 in flyaway condition, to meet Indian Air Force’s urgent needs, as it faces an assertive China and long-time foe Pakistan.
The fighter deal is part of a $150-billion military overhaul India has launched, drawing global arms makers into one of the world’s biggest markets.
“France is a special friend. Eighteen years ago, France was first country we signed a strategic partnership with. We are now here to take it higher,” Modi said.
In other business, France’s Alstom signed a pact with Indian Railways to make 800 locomotives in India, a boost for Modi’s drive to build a domestic industrial base and provide jobs to a growing workforce.
Hollande said a pact for France’s Areva to build six nuclear reactors in India should be concluded in a year. The two sides have been wrangling over price of power from these units for more than a year.