India and France today inked an MoU for the purchase of 36 French Rafale aircraft but persisting differences over the pricing of the fighter jet came in the way of final multi-billion dollar deal being concluded.
This MoU was among the 14 pacts signed after wide-ranging talks between Prime Minister Narendra Modi and visiting French President Francois Hollande which focused on ways to enhance cooperation in counter-terrorism, security and civil nuclear energy.
"...Leaving out financial aspect, India and France have signed Inter-Governmental Agreement on purchase of 36 Rafale fighter jets. We expect that even the financial aspects pertaining to purchase of Rafale jets will be resolved as soon as possible," Modi said at a joint press event with Hollande.
Terming the signing of the IGA as a "decisive" step, the French President said there are some financial issues that will be sorted out in a "couple of days".
The two countries are in negotiation for 36 Rafale fighter jets in fly away condition since the deal was announced by Modi in April during his visit to France.
However, the final deal is yet to be sealed as both sides are still negotiating the price. The deal is estimated to cost about Rs 59,000 crore.
Foreign Secretary S Jaishankar said, "What was signed today was an MoU and, when the financial part of it is settled, then obviously the IGA in its entirety will be concluded".
Top government sources said an IGA will be signed once the prices have been finalised which they hoped would take another four weeks.
Sources said the price for 36 Rafales, as per the UPA tender, keeping the cost escalation and dollar rate in mind, comes to a little over Rs 65,000 crore. This includes the cost involved in making changes India has sought in the aircraft, including Israeli helmet mounted display and some specific weaponry, among others.
"The effort is to bring down the price to less than Euros 8 billion (Rs 59,000 crore)," the sources said, adding the actual price negotiations only started from January 21.
Another point under discussion is the payment of advance which India will have to make.
"At least 50 per cent advance will have to be made including 15 per cent immediate payment," the sources said, adding the French government will stand guarantee.
Meanwhile, in a statement Dassault Aviation, manufacturer
of Rafale said," We are very pleased with this progress, and actively supporting French authorities in their efforts to finalize a complete agreement within the next four weeks.
They said today's agreement will pave the way for the "conclusion of a contract" for the sale of 36 Rafale fighters to India.
Apart from defence cooperation, the talks between the two leaders also focused on ways to boost counter-terrorism cooperation in the aftermath of attack in Paris in November last and Pathankot terror strikes earlier this month.
"From Paris to Pathankot, we saw the gruesome face of the common challenge of terrorism...I also commend the strength of your resolve and action in these terrorist attacks. President Hollande and I have agreed to scale up the range of our counter-terrorism cooperation in a manner that helps us to tangibly mitigate and reduce the threat of extremism and terrorism to our societies.
"We are also of the view that the global community needs to act decisively against those who provide safe havens to terrorists, who nurture them through finances, training and infrastructure support," Modi said.
The two countries reiterated their call for Pakistan to
bring to justice perpetrators of Pathankot and 26/11 terror attacks in Mumbai, which also left two French citizens dead. They also asked Pakistan to ensure such attacks do not recur in the future, a joint statement issued after the talks said.
"To this end, they committed to further develop exchanges in the fields of intelligence, finance, justice and police. They welcomed the strengthening of the cooperation between Indian and French counter terrorism authorities and units, in particular between their cybersecurity experts," the joint statement said.
"Daesh has attacked us. The ISIS is provoking us but we are determined to take the right decision. We will strike time and again those who kill our children. I would like to thank you for the support in dire circumstances. France will never forget. We have decided to strengthen our cooperation against terror," Hollande said.
Insisting that terrorism cannot be justified under any circumstance, regardless of its motivation, wherever and by whomsoever it is committed, Modi and Hollande pitched for decisive actions to be taken against Lashkar-e-Tayibba (LeT), Jaish-e-Mohammad (JeM), Hizb-ul-Mujahideen, Haqqani Network and other terrorist groups such as Al Qaeda.
On other issues which were discussed, Modi said, "From smart cities, locomotives, railway tracks and nuclear power... These are all foundations for building a new commercial partnership."
On his part, Hollande asserted "There is no better trust than sharing civil nuclear technology" and hoped that the issues pertaining to the six reactors at Jaitapur nuclear plant will be settled in a year.
The negotiations will consider cost viability of the project, economical financing from the French side, collaboration on transfer of technology and cost-effective localisation of manufacturing in India for large and critical components in accord with "Make in India" initiative.
"France acknowledged the need for India to have lifetime guarantee of fuel supply and renewed its commitment to reliable, uninterrupted and continued access to nuclear fuel supply throughout the entire lifetime of the plants, as stated in the 2008 bilateral IGA on nuclear cooperation.
"The two leaders agreed on a roadmap of cooperation to speed up discussions on the Jaitapur Nuclear Power Project in 2016. Their shared aim is to start the implementation of the project in early 2017," it said.
France and India underscored the contribution of nuclear energy to their energy security and to the fight against climate change.
France reaffirmed its strong and long standing support for India's candidacy to the international export control regimes, particularly to the Nuclear Suppliers Gropup and welcomed New Delhi's decision to ratify the Convention on Supplementary Compensation for Nuclear Damage, the statement said.
Describing his visit as "outstanding and exceptional", Hollande said it was an honour for France and him to be chief guest at the Republic Day.
"I commend the action of Modi at the climate change conference. I am aware Modi had potential reluctance at the COP 21. He wanted the innovation technology for developing countries to be spread. We owe it to, including Modi for what was achieved at the climate conference," the French President added.
Later, briefing reporters, Foreign Secretary S Jaishankar
explained the issues surrounding the Rafale deal.
"I think essentially what you heard the two leaders say was that on this important but somewhat complicated issue that they have been able to reach agreement in large areas, in the non-financial side.
"On the financial side, we have yet to reach full agreement and people are working on it," he said.
The top diplomat said there is interest on both sides on doing it as soon as possible.
"There is a element of urgency and desire to complete this as soon as possible," he said.
Talking about the MoU, he said there has been considerable progress in these negotiations since last year.
"It was important at this juncture for the progress to be conveyed accurately and positively and that was exactly the intent of the MoU and what is there in the joint statement," he said.
He said the text of the IGA has been agreed upon.
"When you do a text, there is legal scrubbing, there is always a bit of time lag," he said, adding it is not restricted to defence matters only.
"I remember that sometime ago we were discussing on a nuclear matter. It was similar issue where you agree on clinching the text but will need legal scrubbing and the detailing that needs to be done. Except in this case, the financial aspect will also have to be agreed upon," he said.
He also said there would be an offset clause in the deal.
The Foreign Secretary hoped that French companies will be leading in taking advantage of the 'Make in India' initiative, especially in the defence sector.
On the civil nuclear issue, he said the big development is the fact that we have agreed to collaborate to construct six nuclear power reactors. He said the earlier agreement has been revised.
Talking about terror, Jaishankar said globally the tolerance for terrorism is going down.
