India to finalize Rafale deal this fiscal year: air force official

Thu Oct 17, 2013 10:57am EDT
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By Shyamantha Asokan

NEW DELHI (Reuters) - India will finalize a $15 billion deal to buy 126 Rafale fighter jets from France's Dassault Aviation (AVMD.PA: Quote) by March 2014, an Indian air force official said on Thursday, after the deal had been held up by differences over local manufacturing.

New Delhi picked the Rafale for exclusive negotiations in January 2012 after a bidding contest against Eurofighter Typhoon aircraft, made by a consortium involving EADS EAD.PA, Finmeccanica SIFI.MI and BAE Systems (BAES.L: Quote).

But there were differences over the role of India's state-run Hindustan Aeronautics Ltd in manufacturing the jets.

Air Marshal S. Sukumar, deputy chief of air staff, told an aerospace conference the deal would be signed within the current financial year, according to a statement issued by conference organizer, the Confederation of Indian Industry.

Under the deal, Dassault is expected to send 18 ready-made jets and would manufacture the rest in India. Hindustan Aeronautics will be its lead partner.

Dassault had earlier expressed doubts about the ability of the local partner to make such a sophisticated fighter. Hindustan Aeronautics has been developing a light combat aircraft since the early 1980s with no success so far.

A spokesman for Dassault declined to comment. The French company is still hoping to finalize the deal by the end of the 2013.

India's government wants to encourage Indian companies to partner with foreign suppliers to reduce its reliance on imports and boost a domestic defense industry that is dominated by underperforming public sector companies.   Continued...

The logo of French airplanes maker Dassault Aviation is seen on Dassault Aviation headquarters before a news conference to present the company's 20011 annual results in Saint Cloud, Paris suburb, in this March 22, 2012 file photo. REUTERS/Benoit Tessier/Files