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France edges closer to huge deal for jet fighters to India

France edges closer to huge deal for jet fighters to India

AFP · 24 Jan 2016, 19:04

Published: 24 Jan 2016 19:04 GMT+01:00

The invitation for Hollande to be chief guest at India's Republic Day military parade on Tuesday had raised expectations the multi-billion dollar agreement for the Rafale jets would finally be sealed.

But after landing in the northern city of Chandigarh, Hollande cooled talk that the contract was on the verge of being signed. He said further discussions were needed on a prior inter-governmental agreement.

"We are going to take another step on the road which we hope will lead us to India's acquisition of the 36 Rafale jets," Hollande told reporters.

"India needs them and France has shown that it has the world's best aircraft.

"The commercial contract can only come after the inter-governmental accord... which will be discussed during my visit."

While Hollande said he was "optimistic" about the inter-governmental accord being agreed on Monday, a senior French official acknowledged negotiations were still snagged on the price.

And in an interview with the Press Trust of India news agency, the French president said that "agreeing on the technicalities of this arrangement obviously takes time".

Prime Minister Narendra Modi announced in Paris last year that his government had agreed to buy the jets as India looks to modernise its Soviet-era military and keep up with neighbouring Pakistan and China.

The two leaders stepped into the long-delayed deal after tortuous negotiations over a much-larger agreement first signed with France's Dassault Aviation in 2012 broke down.

- Sticking point -

A sticking point has been Delhi's insistence that arms makers invest a percentage of the value of any major deal in India, known as the offset clause.

Hollande began his second official visit to India in Chandigarh, which was designed by French architect Le Corbusier more than 60 years ago.

After Modi greeted Hollande with a hug, the two leaders strolled through Chandigarh's renowned rock garden, with its sculptures made out of rubble from the city's construction, before addressing business leaders.

Modi said he had invited Hollande as a show of solidarity after November's shootings and bombings by Islamists in Paris that killed 130 and evoked memories of the even bloodier 2008 attacks in Mumbai.

"The day Paris was hit by terror, I decided that our Republic Day parade guest must be France as our people are united against the enemies of humanity," Modi said in his speech.

And in a pitch to the assembled CEOs, Modi said India and France were "made for each other".

"France has the resources and capability and we have the need, the market and low-cost manufacturing. That's why India has various opportunities to work with France."

Ministers and executives travelling with Hollande signed a series of accords in Chandigarh with their Indian counterparts on e-commerce, renewable energy and the development of "smart cities", one of Modi's pet projects.

Story continues below…

On Monday the leaders are expected to announce a roadmap for building six French nuclear reactors in the western state of Maharashtra.

They will also lay a foundation stone at the new headquarters of the International Solar Alliance, a 121-nation group launched by Modi at the Paris COP21 conference in November, to expand affordable solar power.

Hollande said he hoped some of the French businesses travelling with him would be at the forefront of the solar energy push.

"We are going to translate our shared commitment to implement what was agreed in Paris into action by launching the solar alliance here," he said.

Hollande and Modi are expected to sit side by side to watch Tuesday's pomp-filled spectacle of military might -- which includes columns of soldiers and Soviet-era tanks -- along Delhi's central Rajpath avenue.

 

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