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France bags India’s $10.4bn order for fighter jets

New Delhi: In a defence deal that is India’s — and amongst the world’s — largest, France’s Dassault has won a $10.4 billion (Rs.52,000 crore) order for 126 fighter jets after over four years of a fiercely-fought bidding process.

Finally, it was a direct financial duel between Dassault and European consortium EADS Cassidian Eurofighter and Rafale pipped Typhoon with the lowest bid to emerge the winner.

“Dassault has been informed that it has emerged L1 in the bid for 126 multi-role fighter aircraft tender,” a defence ministry official told IANS, referring to the lowest price quoted for the Rafale.

“But the contract will be signed only in the next financial year.” The Rafale is a twin-engined, delta-wing jet. It was first introduced in 2000 and since then is produced both for land-based use with the French Air Force and for carrier-based operations with the French Navy. Though it has been offered for export, it had not bagged any foreign order so far.

The offset clause in the tender, included under the Defence Procurement Procedure (DPP) of 2006, requires the winner of the tender to reinvest 50 percent of the deal amount in the Indian defence industry in an effort to energize it.

Under the terms of purchase, the first 18 aircraft will come in a fly-away condition, with the remaining 108 to be manufactured by Hindustan Aeronautics Limited under a transfer of technology agreement. The first 18 jets will have to be supplied within 36 months.

The size of the contract could eventually go up to 200 aircraft as there is a provision for increasing the order by 50 percent without any price hike. The next step in finalising the contract would involve cost negotiations with Dassault which will be held held in the next 10-15 days.

The sources said that the price of the tender — including training and maintenance may reach $15 billion — due to cost escalations in the wake of rising inflation. The negotiations will also include the cost of on-board weaponry and royalties for producing the aircraft in India.

The fighter jets will give a major boost to the defence apparatus of India – the world’s biggest arms importer — as the Indian Air Force (IAF) replaces its obsolete Soviet-era combat planes.

The other four aircraft in the fray earlier were American firms Lockheed Martin’s F-16 and Boeing’s F/A-18, Russian United Aircraft Corporation’s MiG-35 and Swedish SAAB’s Gripen.

In April 2010, the defence ministry shortlisted Dassault and EADS, rejecting the American, Russian and Swedish bids. The process was started with the issuing of a global tender in 2007 after which all the six contenders were subjected to extensive field evaluation trails by the IAF in India and in the country of manufacture. Dassault has also won a $1.4 billion contract to upgrade the IAF’s Mirage-2000 fleet.

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