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India’s $15bn deal to buy Rafale jets in doldrums

India’s plan to buy 126 fighter-jets from Dassault Aviation could be delayed as the two sides struggle to reach an agreement over the role of state-run Hindustan Aeronautics Ltd (HAL), sources said.

India picked the Dassault-made Rafale jet for exclusive negotiations in January 2012 after a hotly contested bidding war with rival manufacturers, but it is still to finalise the $15 billion deal.

Under the initial terms of the proposed deal, Dassault was expected to provide 18 fighters in ‘fly-away’ condition, and then let HAL manufacture the rest in India. However, Dassault now wants two separate contracts to be signed - one for the ready-made ones, and another for the rest to be built by HAL, but India opposes that proposal, an defence ministry official said. ‘Dassault says HAL doesn’t have the capacity and capability to assemble the aircraft,’ said the official, who declined to be identified because he is not authorised to speak to the media.

‘HAL is our main public sector partner. And if needed, capacity and capabilities can be improved. But the proposal for two contracts is not agreeable to the government of India,’ he said.
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