France is bargaining under the newly formatted Rafale deal

Indications are that France is using couple of surprisingly got opportunities to strengthen its bargaining position in its deal with India. After India has switched to urgency on the delivery of the aircrafts, France is slowing a little bit on the deal. Visit of the French Defence Jean-Yves Le Drian to India to design conditions for the direct purchase of Rafale has been rescheduled for next week.

France so far is in an advantageous position on the deal as it has secured a surprising 24 unit order from Qatar. The Middle East crisis has benefited France and the French Defence Minister is reaching Delhi only after his stay at Doha after signing the initial agreement with Qatar.

The French Ambassador to India Francois Richier said that the French Defence Minister is coming for ‘setting up negotiations’. “On Monday, he (Mr Le Drian, the French Defence Minister) will be in Qatar to sign another Rafale deal. He will be in India during next week. It will not be for signing the contract because the agreement is just two weeks old, but he will set up negotiations with India.”

Earlier, India agreed for a direct purchase of 36 aircrafts sidelining the earlier plan of strong offsetting participation by Indian firms. This implies that the flyway mode delivery of the aircraft may come out with minimum value addition of the product in India.

The proposed deal with Qatar and the previous order for 24 from Egypt will give enough negotiation power at a time India is trying to get the aircraft as early as possible. This itself may help France to minimize Indian firm’s participation in the project. France’s delay in initiating the process of negotiations to finanlise the deal is considered as a bargaining strategy from the European country which is traditionally known for hard negotiations. On the other hand, the Indian Defence Minister Manohar Parikar has asked for a quick delivery of the aircrafts.

Still, France will not be opting for avoiding Indian participation below a threshold level as the present deal is for only 36 jets well cut shorted from the earlier 126 units.  A reasonable participation by the Indian firms will be a deal winner for Dassault to secure future orders. 

Share Now