NEW DELHI - The French and Indian defence ministers agreed on Monday to overcome any differences and finalise the sale of 126 fighter jets to India in a deal worth an estimated US$15 billion, the Indian defence ministry said.
France's Dassault Aviation (AVMD.PA: Quote, Profile, Research) has been trying to clinch a deal to sell India its Rafale jets since New Delhi chose the company over other foreign plane manufacturers in 2012. But disagreements over cost and work-sharing have slowed talks, while India's weak economy has stretched government finances.
On Monday, French Defence Minister Jean-Yves Le Drian met his Indian counterpart Manohar Parrikar, who was appointed defence minister last month.
"Both sides agreed to take forward the strategic co-operation between the two countries. They discussed all issues including Rafale. It was decided that whatever differences still existed would be resolved in a fast-track manner," said Indian defence ministry spokesman Sitanshu Kar.
Under the deal, which would provide a major boost to French domestic defence manufacturing, the first 18 planes will be made in France and shipped to India, while the remaining 108 will be produced by state-run Hindustan Aeronautics Ltd (IPO-HIAE.NS: Quote, Profile, Research).
The final phase of exclusive negotiations on the contract should conclude within India's current budget year ending in March 2015, Dassault Chief Executive Eric Trappier said last month.
Rival manufacturers including the makers of the Eurofighter aircraft are hoping that the stalled Rafale deal will collapse, possibly opening the door to negotiations with a new vendor.