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France to Invest $4.5Bln in Indian Defense Under Rafale Deal

Sputnik News

14:08 29.09.2015(updated 14:22 29.09.2015)

France will invest $4.5 billion in India's defense sector in a form of offset obligations under a contract for the purchase of 36 Rafale fighter jets, The Economic Times reported Tuesday, citing sources familiar with the deal.

NEW DELHI (Sputnik) – Countries importing military equipment often demand obligations of 50 to 100 percent of the deal when buying from foreign suppliers. These obligations are often met by the seller by investing in the importer's defense, or other industries.

French investments in India, which are expected to stand at 50 percent of the $9-billion deal, may include projects for civil purposes to be completed by the French companies Dassault and Thales, including the production of spare parts for the business class aircraft Falcon.

According to the sources, the French delegation, led by Engineer-General Stephane Reb from the French Defense Ministry, is set to visit New Delhi on Tuesday to discuss the final contract price and other purchase terms. The contract is due to be finalized within a month, the newspaper reported.

In April, Indian Prime Minister Narendra Modi and French President Francois Hollande agreed to supply the Indian Air Force with 36 French-built Rafale fighters.

In July, it was reported in the media that India had insisted that France spend half of the value of the Rafale deal on India's defense sector, as the Indian Air Force was planning to create two separate bases for the jets.

France, according to reports at the time, was only ready to make a 30-percent investment to cover the associated infrastructure costs, maintenance, training and storage facilities for one base.

The Rafale is a French fourth generation multirole twin-engine fighter aircraft designed and built by Dassault Aviation.


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