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Hard negotiations lie ahead for Dassault after Rafale's Indian selection

With its attainment of "L1 vendor" status in India's medium multi-role combat aircraft (MMRCA) contest for 126 fighters, the Dassault Rafale is one step closer to securing its first overseas deal, but the road to a final agreement is still long.

Dassault on 31 January confirmed that the Rafale had been selected ahead of the Eurofighter Typhoon. The Indian defence ministry, however, told Flightglobal that it has yet to make a formal announcement of the company's L1 status, and was uncertain about the timeframe for this. "Nothing is official yet," a defence ministry source said.

Assuming the formal granting of L1 status, final negotiations between Dassault and the Indian government's Contract Negotiation Committee (CNC) could take between six months and one year, said an industry source familiar with Indian defence procurement policy.

The process can be a tortuous one. According to defence ministry tender guidelines, a CNC should be comprised of individuals representing the stakeholders involved in an acquisition. In the case of MMRCA, the source believes the Indian air force, Hindustan Aeronautics (HAL) and other key parties will be represented.

The CNC will conduct a two-stage negotiation. The first will deal with details such as contract language and deliverables, and the second with pricing.

On clearing the CNC, the contract will need the approval of the Defence Acquisition Council and India's finance ministry. Finally, the package will go before India's Cabinet Committee on Security, which will give the final sign-off.

"The L1 price is not necessarily the price you will win with," said the source. "There will be multiple stakeholders involved in the decision and negotiations."

Industry observers estimate the value of the MMRCA deal at between $10 billion and $20 billion - India's largest foreign arms purchase. Under the terms of the award, 18 aircraft will be delivered in a flyaway condition, with 108 to be built under licence by HAL.

Although the Rafale has struggled in late-stage negotiations in Brazil and the United Arab Emirates, recent French wins on the subcontinent bode well for the successful conclusion of Dassault's MMRCA campaign.

In July 2011, Dassault won a long-awaited $2.2 billion deal to upgrade the Indian air force's Mirage 2000H fighters to the 2000-9 standard. In early January, European firm MBDA confirmed a deal to equip the modified aircraft with Mica air-to-air missiles, although an official contract has yet to be signed.

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