All eyes on Rafale fighter jets deal as Modi heads to France

A Rafale fighter jet, built by French aircraft manufacturer Dassault Aviation, flies over Halim Air Base during a display. Antara Foto, Widodo S. Jusuf/Reuters

NEW DELHI // Prime Minister Narendra Modi begins an eight-day visit to France, Germany and Canada on Thursday in a bid to further his agenda to boost Indian manufacturing, ensure his country’s energy security and increase foreign investment.

The focus of the prime minister’s three days in France will be a fighter aircraft deal and a nuclear power project that have stalled for more than a year.

India is insisting that France stick to the original price quoted for the supply of 126 Rafale fighter aircraft three years ago, when it won the contract. At the time the aircraft were priced at US$12 billion (Dh44bn); neither government has revealed the new price demanded by France.

Another hitch has been the contract requirement that France supply 18 fully built Rafale jets and help build the other 108 at the state-owned Hindustan Aeronautics Limited (HAL) factory in Bengaluru.

The French manufacturer, Dassault Aviation, has raised questions about HAL’s ability to manually fabricate the aircraft’s carbon-fibre skin. In its own factories, Dassault uses a quicker, automated process.

According to media reports during the French defence minister’s visit to India in late February, Dassault says training Indian engineers in this technology and overseeing their work would be more time-consuming and expensive.

France has been cautious about the prospects of resolving these issues during Mr Modi’s trip.

“We are working on it,” Mr Hollande said on Tuesday. “There will be no announcement on the Rafale sales before the visit of Prime Minister Modi in France and I do not want the Indian premier’s visit to be put in the context of a contract.”

Uday Bhaskar, a retired naval commodore and the former director of the Institute for Defence Studies and Analyses, told The National that Mr Modi’s government was keen to review the fine print of the contract.

“India has been burned once before with these prices revisions, when it bought the Admiral Gorshkov aircraft carrier from Russia,” Mr Bhaskar said. “Dassault won the bid under the previous [Congress-led] government, but in the larger sense, this is still a preliminary stage, and I don’t think this visit will produce any dramatic announcement.”

Mr Modi’s other point of focus in France will be the 9,900-megawatt, $9.3bn nuclear power plant to be built in Jaitapur, a town on the coast of Maharashtra state.

That deal, negotiated between India and the French nuclear energy company Areva in 2010, has also stalled over pricing.

The state-run Nuclear Power Corporation of India Limited (NPCIL), which will buy power generated by the plant, has insisted that Areva’s price of 9.18 rupees (Dh0.54) per unit of power is higher than the 6-6.50 rupees it can afford. Areva has said the higher price is necessitated by safety protocols and standards. But in early March, Erwan Hinault, the president of Areva India, hinted that further negotiations would resolve the impasse.

“It is not a perfect world, but we are meeting regularly,” Mr Hinault said in Mumbai. “We are working on achieving the target. A finality in discussions would be reached when either NPCIL is satisfied or the target is reached.”

The Jaitapur power plant has also run into local opposition, with activists calling Areva’s model of reactor untested and warning that it would pose health and radiation hazards to people living nearby.

But R Rajaraman, a nuclear physicist at Jawaharlal Nehru University in New Delhi, said the reactor model – known as the EPR – was untested “only in the sense that it hasn’t been running anywhere for decades”.

“But the designs are all tested,” Dr Rajaraman said. “It has been operating in Finland, and the Finns demanded very high safety measures.”

Mr Modi and Mr Hollande will also discuss agreements in space exploration, solar energy and tourism.

The two countries will also look into possible cooperation in training and anti-terrorism systems between India’s National Security Guard and the National Gendarmerie Intervention Group, both special operations forces.

Mr Modi’s first trip to Europe since talking office last May will continue with a two-day stop in Germany, before he travels to Canada, becoming the first Indian premier to visit the country since Indira Gandhi in 1973.

In Germany, Mr Modi and Chancellor Angela Merkel will inaugurate the Hannover Messe industrial fair, in which India is a partner country this year.

Mr Modi, accompanied by a delegation of 120 Indian business executives and 100 ministers from state and federal levels, will showcase his Make in India campaign.

Launched in September, the initiative invites manufacturers and industries to set up shop in India, expanding the country’s manufacturing base and generating employment.

In Canada, Mr Modi is expected to sign an economic partnership pact and another deal to assure the supply of nuclear reactor fuel, building on a 2010 agreement between the two countries.