The government has cleared the much anticipated deal with France for 36 Rafale fighter jets which will cost 7.878 billion Euros and will be signed on Friday in the presence of French Defence Minister Jean Yves Le Drian.
Defence sources said that deal for the aircraft, the first fighter jet deal in 20 years, comes with a saving of nearly 750 million Euros than the UPA era one, which was scrapped by the Narendra Modi government, besides a 50 per cent offset clause.
This means business worth at least three billion Euros for Indian companies, both big and small, and generating hundreds of jobs in India through offsets.
The Rafale fighter jets, deliveries of which will start in 36 months and finished in 66 months from the date contract is inked, comes equipped with state-of-the-art missiles like Meteor and Scalp that will give the IAF a capability that had been sorely missing in its arsenal.
Sources said the government on Wednesday formally cleared the Inter Governmental Agreement to be signed on Friday in the presence of Drian who arrives on Thursday evening along with CEOs of Dassault Aviation, Thales and MBDA and top government officials.
The contract for the deal was already cleared by the Cabinet Committee on Security earlier. The price of the contract was fixed in May, sources said.
Sources said the "vanila price" (just the 36 aircraft) is about 3.42 billion Euros. The armaments cost about 710 million Euros while Indian specific changes, including integration of Israeli helmet mounted displays, will cost 1700 million Euros.
Rest of the cost include spare parts, maintenance among others.
Besides other features that make the Rafale a strategic weapon in the hands of the IAF is the Beyond Visual Range Meteor air-to-air missile with a range in excess of 150 KM.
Its integration on the Rafale jets will mean the IAF can hit targets inside both Pakistan and across the northern and eastern borders while still staying within India’s own territorial boundary.
Pakistan currently has only a BVR with 80 km range.
During the Kargil war, India used a BVR of 50 km while Pakistan had none. With Meteor, the balance of power in the air space has again tilted in India’s favour.
Scalp, a long-range air-to-ground cruise missile with a range in excess of 300 km also gives the IAF an edge over its adversaries.
The tough negotiations by the MoD-IAF team extracted many concessions and discounts from the French before arriving at a price that is almost 750 million Euros less than what was being quoted by the French side in January 2016.
This was when the commercial negotiations gathered pace, almost seven months after Prime Minister Narendra Modi announced India’s intention to buy 36 Rafales off the shelf from France during his trip to Paris in April 2015.