Modi in France: How unblocking the Rafale deal fits with Make in India

Prime minister Modi’s visit to France – with Germany to follow – was overdue to remove the impression that Europe has today slipped lower down in India’s foreign policy priorities. With Europe we are not rebuilding relationships anew prompted by new geopolitical compulsions or threats, or need to deal with the kind of strategic, regional and territorial issues as we have with countries like the US, China or Japan.

Partnership

This might explain why Modi’s visit to France has not created the kind of buzz that his visits to the US and Japan created or the exchange of visits with China creates. The relationship with Europe is stable and largely free from vexatiousness. Taken as a whole, the European Union is our largest trading partner. Countries like France, Germany or the UK possess industrial, defence, nuclear, space and other high technologies, not to mention financial resources, required to achieve India’s development ambitions.

The economic argument for downgrading Europe vis a vis our Asian partners cannot, therefore, be pushed too far either. The importance of Europe in the matrix of our international relations should not be minimised as some cynics in India are wont to do. To dismiss Europe, seen as beset with problems and facing decline, as increasingly less relevant for India is a view warped by hubris that sits ill with India’s problems and the stage of our development.

Modi has done well to give fresh legs to the wobbling strategic partnership with France by making sure that his visit there last week produced some tangible results in the key areas of defence and nuclear cooperation. True to form, Modi pulled a surprise during the visit by announcing that in view of the critical operational needs of the Air Force he had requested the French president for a quick supply of 36 Rafale jets in flyaway condition through an intergovernmental agreement on terms better than demanded by Dassault “as part of a separate process underway”.

While in terms of our strategic ties with France, Modi has shown decisiveness and imagination by unblocking the stalemate over the Rafale deal and announcing the acquisition of 36 jets in flyaway condition, many questions remain unanswered. How does this decision fit in with Modi’s Make in India concept? How would the reduced costs get worked out quickly enough as such negotiations are always tough and time consuming? The negotiations will be with Dassault, notwithstanding the intergovernmental agreement, and while Dassault find us hard-wearing negotiators, we too find them very difficult interlocutors.

Strategic

It is not clear whether the scope of the total contract has been reduced to only 36 jets or whether negotiations for 126 jets will continue as a separate process. Can the 36 aircraft be inducted in two years, as defence minister Parrikar expects, when Dassault has contracted to supply 24 Rafale jets to Egypt and the company produces only a dozen aircraft a year? Presumably, all these questions have been adequately considered by the government already, including how to fill the gap of 90 fighter aircraft still needed urgently by the IAF.

In the other strategic area – the nuclear one – Modi’s visit has seen positive movement with the signing of the MoU between Areva and L&T, which was welcomed by Modi as widening the scope of industrial cooperation and creating indigenous capacities in India, besides the conclusion of pre-engineering studies agreement between Areva and NPCIL. The objective of the agreement with L&T is to manufacture more reactor equipment in India so as to bring down costs and make the project financially viable in terms of the cost of electricity produced.

Economic

In space – another strategic area with France – Modi’s visit saw the two sides celebrating 50 years of space cooperation with the issue of a stamp to mark the occasion and some agreements between ISRO and its French counterpart. It is noteworthy that France has launched 18 Indian satellites so far and its own spot satellites have been launched by India. Paris is hosting the next Climate Change summit in December this year. India would have to resist pressure to accept emission reduction commitments that would compromise its national interest and yet not be seen as being non-cooperative on an increasingly obsessive issue for the West. Modi’s visit was an opportune moment to discuss this sensitive subject with the French.

The economic component of the visit received due attention with Modi meeting French industrial leaders in an across the table session to project his Make in India concept. The India-French CEO Forum too met and presented its report to Modi and Hollande. Modi, just before his visit, vamped up the list of Indian CEOs participating in this Forum.

All in all, Modi’s visit has imparted a fresh momentum to India-French ties.