Dassault sweats on Rafale deal in India, hopes for 2013

BANGALORE (AFP) - France's Dassault Aviation hopes to conclude its US$12-billion (S$15 billion) deal to sell Rafale jets to India this year, with negotiations set to be taken up by President Francois Hollande next week.

"The ideal would be to sign it in 2013," Dassault chief executive Eric Trappier told AFP in an interview about the world's biggest defence deal at India's air show in Bangalore.

"It's not that surprising that it takes a bit of time," he said, pointing out that the contract involved production of 126 state-of-the-art fighters in France and India over a 15 to 20 year period.

He also confirmed Indian negotiators had detailed their needs for an additional 63 planes beyond the initial order of 126, as reported after a visit by India's Foreign Minister Salman Khurshid to Paris in January.

"It's to let us know that they'll need the assembly lines for a long time," he said.

Mr Hollande is to visit New Delhi on Feb 14 to 15 on his first trip to India since being elected in May. Mr Trappier will be in the delegation.

"I don't think there are military aircraft sales without good political relations," said Mr Trappier.

Dassault is one of the big names at this week's Aero India as it shows off the Rafale which beat competition from six rivals from Russia, the US and Europe last year.

Exclusive negotiations are under way to determine the final price and amount of technology transfers, with Indian Defence Minister A.K. Antony giving an indication of the complexities involved in a Wednesday news conference.

The deal will have to pass through "six or seven layers" of vetting before being presented to the finance ministry and the cabinet committee on security.

Mr Antony, seen as a clean operator in India's notoriously dirty politics, also said his officials would ensure "no malpractice is there" and denied budget cuts in his ministry would have an impact on "the mother of all contracts".

France is desperate to make its first foreign sale of the Rafale, which has struggled to find buyers after investments of tens of billions of euros.

The conclusion of the deal has been repeatedly delayed. India initially set a target of the end of last year, which slipped to the end of the current fiscal year in March.

Mr Hollande will be followed days later in Delhi by British Prime Minister David Cameron who has lobbied on behalf of the Eurofighter, a rival jet made by a partly British consortium which is ready to step in if Dassault fails.

Under the proposed Rafale deal, the first 18 aircraft are to be made in France with the remainder to be produced under licence by Hindustan Aeronautics Limited (HAL), the state-run Indian aerospace behemoth.

Dassault must conclude licence deals with about 20-30 different Indian partners, according to Mr Trappier. "We've done more than half of the work so far," he said.

The French group has also formed a joint venture with the Indian conglomerate Reliance, which has no former military production experience but will be involved as a supplier.

Indian Foreign Minister Khurshid likened the negotiations to a fine French wine while in Paris.

"The contract details are being worked out. A decision has already been taken, just wait a little for the cork to pop and you'll have some good wine to taste," he said.

The Rafale has carried out bombing missions in Afghanistan, Libya and most recently in Mali, where it is currently flying sorties targeting Islamist militants.