India has been able to save more than Rs 4,200 crore in procurement of 36 Rafale combat aircraft from France in a deal expected to be signed on September 23.
The total value of the deal would come around Euro 7.8 billion.
"We have been able to save almost Euro 600 million in this deal through bargaining and negotiations. It caused a delay of a few months but yielded us good results," highly-placed defence ministry sources told THE WEEK.
The deal for 36 aircraft was initiated by Prime Minister Narendra Modi in France last year after the mega 126 MMRCA deal was scrapped following complications in the tender due to the procurement procedure.
The cost, offsets and service details have been finalised and the work is being done on the Inter-Governmental Agreement for the deal.
A “working team” from France is already in town with their own translators and are going through the contract, running into several thousand pages, with their Indian counterparts.
The sources said that once the IGA is firmed up, the document will go back to the Cabinet Committee on Security for final clearance.
They said that India has been able to save over Euro 590 million through tough price negotiations which began in January this year.
Though the deal could have been firmed up earlier, issues like pricing and offsets took time as India wanted a better contract.
Following intervention by Modi late last year, France agreed for a 50 per cent offset clause. This means creating business worth at least three billion Euros for Indian companies, both big and small, and generating thousands of jobs in India through offsets.
A high-level delegation from France could come down for the formal signing of the contract, French sources said.
The delivery of the fighter aircraft is expected to begin in 2019, with an annual inflation capped at 3.5 per cent.
The weapon systems, part of the deal, include the new-age, beyond visual range missile ‘Meteor’, and Israeli helmet mounted display.
