Narendra Modi promises to buy French warplanes

Narendra Modi has given a boost to France's defence industry by promising to buy 36 Rafale combat aircraft off the shelf, worth an estimated €4bn or more.

Speaking a state visits to France on Friday the Indian premier said his country had an "urgent operational need" for the aircraft and he wanted to buy them as quickly as possible.

Dassault Aviation's Rafale emerged in 2012 as the low cost bidder in an Indian competition for 126 fighter jets,edging out the Eurofighter typhoon in a fierce contest, but that the talks on finalising the details have dragged on for years over Delhi's requirement that 108 of the planes be made in India.

Mr Modi has made increasing domestic defence production, in collaboration with foreign partner, a key component of his "Make in India" campaign, intended to promote industrialisation.

But India's armed forces are frustrated over the slow pace in finalising the fighter jet deal, a process that began over a decade ago. There is concern within India's armed forces that its weapons modernisation program is failing to keep pace with neighbours.

"India's decision to buy 36 Rafale jets from France in ready-to-fly condition is important for the Indian Air Force to regain its depleting squadron strength," said Sameer Patil, a national security expert at Gateway House, a Mumbai-think tank.

Mr Patil said the deal was "a necessary trade-off" with Mr Modi's aim to promote local production.

But Mr Modi's promise in Paris is far from a firm commitment as no contract with Dassault Aviation has yet been signed.

It is also a far cry from the number of aircraft that India indicated it needed three years ago.

Discussions have dragged on partly over price and partly over New Delhi's demand that aircraft be made by state-owned Hindustan Aeronautics.

People close to the situation said these discussions were likely to continue and there was no sign of when or whether these would conclude.

In the meantime the price of the 126 aircraft is believed to have risen from €12bn to more than €20bn.

"I have asked President (Francois Hollande) to supply 36 ready to fly Rafale fighter jets to India," Mr Modi said. "Our civil servants will discuss in more detail and continue the negotiations."

Nevertheless the Indian prime minister's public commitment to buy 36 French-built aircraft is a significant boost for President Francois Hollande, who has succeeded where his predecessors Nicolas Sarkozy and Jacques Chirac failed.

The first export order in 27 years for an aircraft that cost more than €40bn to develop was clinched only in February when President Hollande announced a deal to sell 24 to Egypt for an estimated €3.5bn.

Many of these aircraft were originally destined for the French air force which had been forced to take jets sooner than planned to keep the production line going.

The Egyptian deal was sealed with French financing.

President Hollande said on Friday that France intended to invest €2bn in India, including a memorandum of understanding for several nuclear power plants in Jaitapur, deals in rail and cinema. Visas will also be expedited for Indian visitors.

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation