Article Posted on : - May 04, 2015

Rafale jet fighter. Photo: Dassault Aviation.

PANAJI (PTI)): Ahead of French Defence Minister Jean-Yves Le Drian's visit to New Delhi this week, India on Monday said negotiations for buying 36 Rafale fighters off the shelf will commence this month and will be wrapped up in a time-bound manner.

"The government-to-government committee will be set up which will begin negotiations on the (Rafale) deal. The negotiations will start anytime in May and we have to conclude them as early as possible," Defence Minister Manohar Parrikar told PTI here.

Jean-Yves Le Drian is scheduled to visit India on May 5 and hold talks with Parrikar and National Security Advisor Ajit Doval on May 6 to carry forward the proposed deal.

Last month, during Prime Minister Narendra Modi's visit to Paris, India and France had agreed to get into a government to government contract for 36 Rafale jets in fly-away condition keeping the critical requirement of the Indian Air Force in mind.

The deal is estimated to be over USD 6 billion and will have about 30-50 per cent offset.

Parrikar said the government-appointed committee will complete the negotiations in a "time-bound manner".

"He (Drian) will visit only for the purpose of working out the modalities and to take the process forward. We will not be directly involved in future talks. The committee is being appointed for it by two governments to kick-start the process and fix the modalities," he said.

French defence major Dassault Aviation, makers of Rafale, is likely to enter into a joint venture with state-run HAL or any private player to set up a base here for augmenting its existing production line in Merignac in France, defence sources said.

Parrikar also said the Defence Procurement Policy (DPP) will be in place in the next two-three months and is likely to come up before the ministry in June as there are some chapters that are to be addressed.

"Basically the policy consists of exports, 'Make in India' initiative, level-playing field for suppliers, policy on agents, black listing policy besides others," he said.

Parrikar maintained that these are under finalisation and some of them might be notified before the end of June.

"But I can say that in next two-three months the DPP will be in place," he added.

The Defence Minister said the policy for procurements would depend on strategic importance of the deal and its type.

He said the Defence Ministry's committee on DPP will give its report within 45 days.

"The committee will go through DPP and suggest amendments in next 45 days. They can also submit their interim report so that some aspects would be dealt in the meantime. You can see lot of procedures coming up in May and June itself," he said.

Parrikar said despite the work is in progress over the DPP, the Ministry has already cleared procurements worth Rs 1,10,000 crore, of which 90 per cent are under 'Make in India' initiative.

"The current procedures have lot of lacunae. It has lot of unexplained areas. The committee is considering some of the aspects in the procedures like level-playing field for everyone, and also excise duty will be common across the board. We are also working on other areas to have more transparency and easier modes," he added.

The Minister said the DPP, which establishes parametres for India's defence procurement process, is going to be the biggest step for the Ministry which has already taken up some action including allowing 49 per cent foreign direct investment (FDI) in the sector and in some cases even 100 per cent.

"The second step is that most of the procurements are done with majority of the component with Make in India. The Defence Ministry has also delisted some of the items for exports. In the last 6-8 months the export NOCs are granted online," he added.

"Earlier, the NOCs used to take months to get cleared... Now we give them within specified time frame... I have been intimated by industry that export NOCs are getting cleared faster," Parrikar commented.

The Minister said the entire idea of DPP is to ensure that 'Make in India' initiative is a success and also long term guarantee is provided to the suppliers.

"Today, if someone makes an item for defence, there is no guarantee that he will get the order for five years at a stretch. Who will develop something and spend energy unless he is clear on what is the amount of business that he would be able to do...if someone develops something he needs a long term guarantee," said the minister adding "the Ministry will treat suppliers as partners."

Parrikar said when someone develops something he should be given initial support. This aspect would be considered in DPP.