India to decide on Rafale fighter jet deal only after March

Two Rafale fighter jets fly over their air base in Saint-Dizier February 13, 2015. REUTERS/Charles Platiau

By Siva Govindasamy and Sagarika Jaisinghani

BENGALURU, INDIA (Reuters) - India will decide on the fate of a long-delayed deal for 126 Dassault(AVMD.PA) Rafale fighter jets only after March, Defence Minister Manohar Parrikar said on Wednesday.

The ministry's Contract Negotiations Committee (CNC) should report back by early March, Parrikar told a media conference at the Aero India airshow in Bengaluru.

He declined to say when a final decision was likely on the contract, which was initially worth $12 billion and could go up to $20 billion.

The Rafale was picked in 2012 over rival offers from the United States, Europe and Russia. A final deal has been held up due to a stalemate over a crucial component of the deal.

Under the terms of the contract, the winning bidder will supply only 18 of the aircraft directly and the rest will be manufactured in India by state-owned Hindustan Aeronautics.

Dassault, however, has been reluctant to provide guarantees for the aircraft that are produced in India.

"It would be clinically insane for Dassault to guarantee HAL-built planes. The only way forward for the program is to drop this absurd idea," said Richard Aboulafia, vice-president of analysis at aerospace and defence consultancy Teal Group.

Some Indian news reports have indicated that the deal could be in trouble.

A French source, however, told Reuters on Tuesday that this week's sudden and unexpected deal with Egypt for 24 Rafale jets could speed up several other sets of talks, including those in India.

France is in “final stage” of negotiations to sell up to 36 of the aircraft to Qatar, and is in talks with both Malaysia and the United Arab Emirates, the source added.

(Additional reporting by Sweta Singh and Tommy Wilkes; Editing by Muralikumar Anantharaman)