The Modi government has cleared the much anticipated deal with France for 36 Rafale fighter jets which will cost 7.878 billion Euro (around Rs 59,000 crore).
Defence minister Manohar Parikkar and his French counterpart Jean Yves Le Drian will sign the deal on September 23.
It is the first fighter jet deal in 20 years and comes with a saving of nearly 750 million Euros than the UPA era one.
The deal also comes with a 50 per cent offset clause which means Indian companies will get business worth at least three billion Euros, and generating hundreds of jobs.
The Rafale deal is crucial for Indian Air Force which is witnessing a rapid drawdown in its combat squadrons. To combat China and Pakistan, the IAF needs 45 combat units. And as of now the IAF has 33 fighter squadrons, each consisting of 18 fighter planes. The IAF is low on number of warplanes for a two-front war.
According to Air Chief Marshal Arup Raha, the draw down in IAF combat squadrons will continue unabated, as the entire fleet of upgraded and non-upgraded MiG-21s and MiG-27s are to be retired by 2022.
He has clarified that while the Su-30 MKI would complement the Rafale, it was not an alternative to the Rafale due to the difference in roles and capabilities for the two fighters.
The Rafale fighter jets will come equipped with state-of-the-art missiles like that will give the IAF a capability it was lacking.
Meteor missile is a Beyond Visual Range missile and provides a no-escape zone three times greater than that of a conventionally powered missile. Meteor is also five times as lethal in comparison to the American AMRAAM missile. The Rafales will also be fitted with MICA missiles, an Air to Land precision missile of more than 300 km range.
France is also guarantying performance-based logistics support which means that 75 per cent of the fleet will be airworthy at any given time. Sukhoi Su30 fighters have an airworthiness of 50 per cent.
The French had made an opening offer of Euro 12 billion in May last year and it has come down to Euro 8.6 billion on January 26. And it was in May this year, sources said, that the two sides finally agreed at a price of Euro 7.878 bn.