Bomb bays to Delhi
India favours France's Dassault
"WE'VE been waiting for this day for 30 years," said Nicolas Sarkozy, France's president,
on the news this week that India had gone into exclusive negotiations with Dassault Aviation, a French firm, to buy 126 of its Rafale warplanes for $15 billion-20 billion.
France has not sold a single Rafale overseas, and until this week the plane's future looked iffy.
Shares in Dassault Aviation soared by 18.5%.
The loser, ironically, was the Rafale's cousin, the Eurofighter Typhoon, built by a consortium led by EADS, Europe's defence and aerospace champion, which is jointly controlled by Germany and France.
EADS itself owns a 46% stake in Dassault, a legacy of earlier French government meddling, so its own shares inched up on the news.
Dassault won its exclusive-bidder status by offering the lower price.
Both European jets had satisfied the technical requirements of the Indian Air Force, which wants zippier planes to guard against China's Chengdu J-10 combat aircraft and Pakistan's ageing American F-16s.
In tests over the Himalayas and the desert, India had eliminated the F-16 and F/A-18, the Russian MiG-35 and Swedish JAS 39 Gripen from the process during 2009-10.
The capabilities of both the Rafale and the Eurofighter were on display during the Libyan war.
The Typhoon is the superior air-to-air interceptor.
The Rafale switches more easily into a ground-attack mode.
After seeing the Rafale rejected repeatedly over the past decade, by the Netherlands, South Korea, Singapore, Morocco, the United Arab Emirates and Switzerland, the French were desperate to win a contract.
The plane was becoming a costly embarrassment, especially for Mr Sarkozy, who has long promised a sale to Brazil but has nothing to show for his efforts.
Some even wondered if the Rafale could survive with France as its only customer.
Now Dassault must seal the contract with India in a series of detailed negotiations over technology transfer and other conditions.
India is known for switching to other bidders before finally signing a contract.
"The Indians will now squeeze the French hard," says an executive on the Typhoon side.
That said, India has used Dassault's Mirage jets for many years, and last year signed a $2.4 billion deal with Dassault,
Thales and MBDA, two other French defence firms, to upgrade its French planes.
For the Eurofighter consortium the Indian deal is crucial too.
David Cameron, Britain's prime minister, said this week that the Typhoon is "far better" than the Rafale.
Sales of the Typhoon, which went into service in 2004, have disappointed.
The Eurofighter member governments (Germany, Britain, Italy and Spain) have all ordered planes, but only Austria and Saudi Arabia have bought them from outside the group.
Eurofighter may now lower its price to rejoin the bidding for India's contract.
It may also offer India the carrot of equal status as a partner in the programme, alongside the four European nations.
Eurofighter says it will be helped by what is turning out to be a transparent procurement process.
Whereas previous Indian arms deals have been dogged by accusations of corruption, this one has so far been exemplary, says an executive involved.
Having opted out of the Eurofighter project in 1985, France's determination to go it alone in defence matters has led to the spectacle of two expensive European combat planes competing for the same big contract.
"Europe should not have two jets fighting each other," says Zafar Khan, a defence-industry analyst at Societe Generale, a French bank. The next generation of European fighter jets, he says, should be a more co-ordinated effort.