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India Expects First Rafale Delivery 3 Years After Deal Reached

Feb. 7 (Bloomberg) -- India’s air force expects to take delivery of the first of 126 Dassault Aviation SA fighter jets three years after a final deal is signed, its chief N.A.K. Browne told reporters at an air show in Bangalore.

India chose Dassault, the French maker of combat planes and business jets, for exclusive negotiations for the fighter aircraft order last year. The acquisition of the Rafale fighter jets would strengthen India’s efforts to upgrade and modernize its military, both to thwart its traditional rival Pakistan as well as counter China’s growing power.

The closing agreement to buy the planes “must be decided this year, then only deliveries will happen on time,” Browne said today, referring to the next financial year starting April 1. “If the contract is signed this year, the first squadron will arrive by 2016.”

The proposal to buy the Rafale is being evaluated by a government cost negotiation panel before it goes to the finance ministry and the cabinet for approval, Defense Minister A.K. Antony said yesterday.

“Issues including arrangement of defense offset obligations and transfer of technology seems still to be resolved,” said Deba Ranjan Mohanty, chairman of the Indicia Research & Advisory, a New Delhi-based defense research organization. The contract could have an estimated value of between $18 billion and $20 billion, Mohanty said.

The delay in completion of the deal is because the government wants to ensure there is no “malpractice,” Antony said yesterday, without providing a timeframe.

The Rafale contract isn’t ready to be signed during President Francois Hollande’s Feb. 14-15 state visit to India, a French official said in Paris yesterday, on the condition he wasn’t identified. Talks are “progressing well” on the key remaining issue of how to transfer production to India after the first 18 aircraft, which will be manufactured in France, he said.

To contact the reporter on this story: Karthikeyan Sundaram in New Delhi at kmeenakshisu@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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