Deal for jets possible in Modi's first France trip

Discussions underway, but an Indian official calls contract announcement 'a bit of hype'

India was aiming to make a deal to buy 63 French-made Rafale fighter jets for $7.7 billion during Indian Prime Minister Narendra Modi's two-day visit to Paris, which began on Friday, Le Monde newspaper reported.

Indian officials confirmed that a major push was on to reach an agreement to buy the jets during the visit, with one holding out the prospect of an announcement, if not a final deal, should India secure more favorable terms.

President Francois Hollande said on Friday that he hoped to be able to make "progress" with Modi over the deal, dubbed the "contract of the century" in the French media.

It has been bogged down over cost and the assembly of the high-tech planes.

Ahead of Modi's visit, speculation centered on whether Modi and Hollande could achieve a breakthrough in long-blocked talks over 126 fighter jets.

In a bid to get things moving, New Delhi was considering buying a smaller number of planes to replace its aging air force fleet, Indian media reported.

The Hindustan Times said the government was "seriously considering strategic purchase of up to 40 Rafales for the Indian air force" due to "operational necessity", with further purchases later.

It quoted a source, which it did not identify, as saying a new deal could be worked out this year, with the exact number of planes dependent on the final price.

Neither Dassault Aviation, which builds the Rafale, nor the French president's office could be reached for comment. The French Defense Ministry declined to comment.

The Hindustan Times and a widely watched defense blogger said that a direct government-to-government contract to buy a smaller number of planes than the 126 originally envisioned under a tender deal was one possible outcome because of problems linked to localizing production of most of the planes in India.

Blogger Nitin Ghokale said the talks focused on buying between 60 and 63 jets.

One Indian official, who requested anonymity, said, "It's correct that discussions are underway, but a contract announcement is a bit of hype.

"If things work out and terms are more attractive than earlier, then maybe an understanding."

A source at the ministry said that a "serious effort" was underway by both sides to reach a solution.

In an interview on Wednesday, Modi said the two countries should be able to make progress in talks on the Rafale. A signing ceremony for various contracts is set for late Friday.

The original Rafale contract was worth $12 billion but was widely believed to have ballooned to $20 billion, primarily because of the implications of building some of the jets in India.

It is not clear how the Paris talks fit into that deal.

Modi, according to the French translation of an interview published on Thursday in the daily Le Figaro, said his government sees France as "an important partner to support India's development".

"Just like in the nuclear sector, defense cooperation is a key part of our traditional ties with France," he said.

French nuclear giant Areva is still awaiting the go-ahead to install six reactors in India's western state of Maharashtra, five years after a bilateral civil nuclear accord.

Modi was set to travel to the southern French city of Toulouse on Saturday to visit the headquarters of plane-maker Airbus.

Reuters - AFP - AP