India, France close to deal on Rafale jets: sources

Reuters News
Posted: Apr 10, 2015 5:16 AM

PARIS (Reuters) - India is hoping to mark a visit by its Prime Minister to France starting on Friday by finalizing a deal for dozens of French fighter jets that the two countries have been negotiating over for more than three years, four French officials said.

Le Monde newspaper reported earlier on Friday that talks centered on the purchase of 63 Rafale jets for 7.2 billion euros ($7.7 billion), although the number of planes was not finalised.

A French diplomatic source said there could be an announcement as early as Friday evening but that the deal could ultimately involve fewer jets: more than the 24 France sold to Egypt in February but fewer than 50.

"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."

Indian officials confirmed that a major push was on to reach an agreement to buy the Rafales during Prime Minister Narendra Modi’s visit to Paris.

Talks have been going on for more than three years over how to resolve differences over pricing and local assembly for the planes, which are manufactured by Dassault Aviation.

The firm, whose shares were up 4.2 percent by 1426 GMT (10.26 a.m. EDT), declined to comment, as did the French president's office.

The original Indian Rafale contract - for 124 planes including 108 made in India - was worth $12 billion but was widely 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.

Analysts say Dassault's Rafale deal with Egypt in February may have helped break the logjam in negotiations with other customers since they are now on notice that if they want to have the Rafale they may have to wait for it.

India's military says it needs to start replacing its aging jet fleet from 2017.

(Reporting by Leigh Thomas, John Irish in Paris and Frank Jack Daniel, Rupam Jain Nair and Douglas Busvine in New Delhi; Editing by James Regan and John Stonestreet)