PARIS France and India are negotiating whether to widen a proposed $9 billion deal for the sale of 36 French-built Rafale warplanes to include an option for further purchases, but have yet to decide the scope of the deal, a person close to the talks said.
The nations have been negotiating for months after Indian Prime Minister Narendra Modi announced plans to buy 36 warplanes directly from the French government following the collapse of a larger commercial deal with Dassault Aviation.
Talks have sped up in recent weeks ahead of a visit to India by French President Francois Hollande on January 25-27, and aides were said to be locked in discussions with Indian officials at France's presidential offices on Wednesday.
"The deal should be signed at the end of January and there is an option" for more jets, the person close to the talks said.
Dassault Aviation declined to comment.
Indian government sources say the Rafale deal is politically done, paving the way for Hollande’s visit, though the country's longstanding efforts to modernise its air force have been peppered with delays and premature hopes of a deal.
One source at the defence ministry said the all-in price for the 36 fighter jets, in fly-away condition, was 610 billion rupees ($9.1 billion).
An option for add-on purchases could give France an extra edge over U.S. and European rivals circling India's lucrative arms market and allay concerns among India's military about the strength of its ageing air force, which is at its weakest operational strength since the 1962 war against China.
The source close to the talks played down a report that the options would cover 18 planes, expanding the potential deal by 50 percent. "No. The negotiations are ongoing," he said.
Indian military officials have warned their air force risks a major capability gap with China and Pakistan without new western warplanes, or if local defence contractors cannot produce what the military needs in a timely manner.
In October, Indian officials said the government had turned down the military's request to expand the acquisition of 36 Dassault-built fighter planes to plug vital gaps, nudging it to accept an indigenous combat plane.
In August, sources said talks to finalize the government-to-government deal for 36 jets had run into snags over the unit price and a condition that Dassault Aviation invest a big percentage of the deal's value in India.
Addressing that potential sticking point, the new contract may involve "offsets," or local work, worth 30 percent of the value of the deal, an Indian defence source said.
(Additional reporting by Nigram Prusty, Douglas Busvine; Writing by Tim Hepher; Editing by Katharine Houreld)
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Updated Date: Jan 13, 2016 16:34 PM