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India, France ink $7.87 billion agreement for 36 Rafales (Relevant for GS Prelims and Mains Paper II)

Rafale Deal Sealed
India and France concluded an Inter-Governmental Agreement for the purchase of 36 Rafale fighter jets at a cost of €7.87 billion, the first fighter aircraft deal since the purchase of Sukhois from Russia in the late 90’s.

Aircraft delivery
Dassault will begin aircraft deliveries after 36 months and complete in 67 months. France will also provide logistics and ground support and ensure that there is 75 percent i.e. 27 aircraft are operationally available at any time.

Customisation
The aircraft will be customised as per the requirements of the IAF which include Helmet Mounted Displays, radar warning receiver, infrared search and track among others.

No Optional Clause
Unlike the practice in defence deals, this deal does not have an optional clause. Under optional clause another 50 percent of the contract additional units can be procured at the same price after conclusion of the main contract.

50% Offset clause
There is a 50 per cent offset clause under which French industry will invest half the contract value back in the country which is expected to develop some expertise domestically in the aerospace sector.
Officials said 74 percent of the 50 percent offset value should be exported from India. This is expected to result in Euro 3 billion over the next 7 years.

All you need to know about Rafale Deal

What is Rafale aircraft?
Rafales are twin-engine Medium Multi-Role Combat Aircraft (MMRCA) manufactured by Dassault Aviation, a French firm. Rafale fighter jets are positioned as ‘omnirole’ aircrafts that capable to perform a wide-range of combat roles such as air supremacy, interdiction, aerial reconnaissance, ground support, in-depth strike, anti-ship strike and nuclear deterrence.

When did the actual procurement process begin?
Indian Air Force sought additional fighter jets in 2001. The current IAF fleet largely consists of heavy and light-weight combat aircraft. So the Defence Ministry considered bringing in intermediate medium-weight fighter jets.
Though the idea has been around since 2001, the actual process began in 2007. The Defence Acquisition Council, approved the Request For Proposal to buy 126 aircraft in August 2007. This kick-started the bidding process.

Delay in the execution of deal
Talks then dragged on due to the difference in pricing, offsets, customisations sought by the IAF and sovereign guarantees the Defence Ministry was pushing for.

Revised Policy
Though the initial plan was to buy 126 jets, India scaled it down to 36, that too in ready condition.

How important is this deal to both India and France?
France: Rafale jets are currently being used mostly by France and also by Egypt and Qatar. Dassault is hoping that export of Rafale jets will help the company meet its revenue targets. India was the first country that agreed to buy Rafale, after it was used in Libyan airstrikes. If India inducts these jets in its military fold, other nations could express its willingness to buy Rafales.

India: India chose Dassault over its traditional partner Russia’s MiG. It also ignored U.S.’ Lockheed, at a time when India and U.S. were aiming for closer ties. Procurement of combat aircraft is long overdue for the Indian Air Force. Further delay can only make things worse. This deal is India’s biggest-ever procurement.



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