After months of seeing Dassault Aviation being browbeaten in the Indian press, French arms procurement agency DGA defended its contractor, asserting that a 2012 agreement to provide India with Rafale fighter jets never committed the company to guarantee aircraft manufactured in India at state-owned Hindustan Aeronautics Ltd. (HAL). However, a recent senior adviser to HAL’s management tells Aviation Week that guaranteeing HAL’s work is not the issue, but that the French are being “rigid” and refusing to stand behind the integrity of the design.

“Dassault will not be responsible for the whole contract. It is a co-management setup,” says French defense procurement chief Laurent Collet-Billon, who was clear that France will not assume full liability for HAL-built Rafales. “It cannot be a problem, because it was not in the request for proposals [RFP].”

Speaking to reporters during an annual media address Feb. 9, France’s arms procurement chief said the €10.2 billion ($12 billion) agreement—which has been under negotiation for more than three years—calls for the first 18 of 126 Rafale jets to be built in France. After that, HAL would take over production of the remaining 108 aircraft.

Dassault’s responsibility for the latter has been the subject of heated negotiations between New Delhi and Paris in recent months. Pressure on the talks has increased because India, according to defense ministry officials, wants to make a final call on the Rafale project before Prime Minister Narendra Modi visits France in April.

“A lot of progress has been made since 2012,” says Collet-Billon, adding that he wants to believe negotiations will give way to a contract for the 126 fighters plus 63 options. But Collet-Billon says talks with the Indian government have become bogged down over questions of production of the fighters on Indian soil. “India has its own pace,” he said of New Delhi officials. “It’s not useful to put pressure on the client. We have to live with our differences.”

French officials are increasingly optimistic that a Rafale deal will be signed shortly with Egypt, and an order from Qatar is still considered likely. Those deals would end Rafale’s export drought and reduce India’s negotiating leverage.

But even as a French official in India insists that “everything is at its normal pace,” Indian officials are stoking speculation that the acquisition process could be delayed again, and that India could choose to acquire more Sukhoi Su-30MKI fighters as an alternative to the Rafale.

Moreover, a retired senior Indian military officer who was involved in the drafting of the original RFP and has been a senior advisor to HAL, tells Aviation Week that “the French don’t want to be accountable in any way. The original equipment manufacturer [OEM] has to stand guarantee with respect to design and integrity of design. The French are trying to get away from the OEM’s responsibility.” He added that the defense ministry would eventually have to choose between the Rafale and the Fifth-Generation Fighter Aircraft (FGFA), a HAL-developed variant of the Sukhoi T-50.

Defense minister Manohar Parrikar told a local television channel in January that “the Su-30 choice is always there. Upgrade the Su-30 to make it more capable by equipping it with state-of-the-art electronic warfare systems.” 

The Indian defense ministry is complaining about Dassault’s alleged unwillingness to guarantee the performance of the HAL-built aircraft. According to Indian officials, the original RFP required bidders to transfer technology for production to HAL as well as provide a warranty for HAL’s work. “The offer of the French firm for technology transfer is compliant to the requirements specified in the RFP,” the minister said, but Dassault’s guarantee terms—which are limited to the first 18 aircraft—are inadequate.

“Irrespective of anything, the RFP terms have to be met. . . . They cannot be diluted,” Parrikar added. However, the minister also ruled out the possibility of re-opening the competition. 

Dassault’s response to the RFP was influenced by a planned partnership with Reliance Industries, a $75 billion private-sector energy-based conglomerate that planned to expand into aerospace and defense. Reliance would have performed much of the manufacturing work on the locally built Rafales in new-build facilities. However, the Indian government has insisted that HAL build the aircraft. The original manufacturers of the Su-30MKI and Jaguar were not asked for similar guarantees.

Amber Dubey, head of defense and aerospace at KPMG India, commented that “to drag the selection process for eight long years and then question the very need for the product may not reflect very well on India. A flexible approach, without compromising India’s interests, is needed here.”