The contrast is striking between the spreading controversy around the 2016 deal that saw India purchase Dassault Rafale fighters and progress toward delivery. On the one hand, a former French president and a French publication seem to support claims by the Indian opposition party that an offset contract was tainted by crony capitalism. On the other, Dassault is executing a wide-ranging plan to start deliveries in September 2019.
It is unlikely the political row will jeopardize the sale, primarily because handovers will almost certainly begin before a court passes judgment—if it does. But the controversy might have consequences for future aircraft procurement in India. U.S. OEMs Lockheed Martin and Boeing are in the race to provide India with a fleet of 110 new fighter-bombers in one of the world’s largest open tenders, floated early this year.
In April, a meeting of Dassault Aviation’s executive committee took place in New Delhi. The gathering illustrated the importance of the country to the company’s long-term strategy, beyond the 36 Rafales already ordered. Despite similar orders from Egypt and Qatar, no such meeting is anticipated in Cairo or Doha.
Prime Minister Narendra Modi’s government wants the order to morph into a deep-rooted partnership that benefits the local economy. The 50% offset contract for the Rafale deal is massive, at $4.5 billion. Seen from Dassault’s headquarters in Saint-Cloud, near Paris, India is a market for a total of 200 Rafales. As for business jets, investing in India is an opportunity for Dassault to establish a lower-cost manufacturing base, in the context of fierce competition with Gulfstream. (end of excerpt)
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