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A French navy Rafale manufactured by France's Dassault Aviation. The Rafale beat out the Eurofighter, made by a consortium of German, British, Italian and Spanish aerospace firms, to win the $20-billion (U.S.) contract to supply 126 combat aircraft for the Indian air force. (Remy de la Mauviniere/AP/Remy de la Mauviniere/AP)
A French navy Rafale manufactured by France's Dassault Aviation. The Rafale beat out the Eurofighter, made by a consortium of German, British, Italian and Spanish aerospace firms, to win the $20-billion (U.S.) contract to supply 126 combat aircraft for the Indian air force. (Remy de la Mauviniere/AP/Remy de la Mauviniere/AP)

A dogfight over Delhi Add to ...

But they overlooked Indian misgivings about security of supply for an aircraft built by four countries across a continent in financial turmoil and amid worries about the aircraft’s radar capabilities. “The upside is that Eurofighter delivers you four countries as strategic partners,” says Douglas Barrie of the London-based International Institute for Strategic Studies, but “the downside is they have to negotiate with each other before they negotiate with you.”

They also underestimated the government-to-government nature of India’s arms dealings; its deep-seated fears over its energy vulnerabilities; and its hunt for a bargain. “Patience is a key aspect of doing business in India, as is price,” says Gunjan Bagla of California-based Amritt Inc, an advisory service. “The Indian approach is that so long as a product meets the minimum threshold of performance, then it seeks the best value for money. This should come as no surprise.”

Eurofighter executives want a “detailed explanation” from India’s Ministry of Defence of how calculations were made. They doubt that Dassault, which conducted its campaign from within the grey concrete walls of the French embassy, can deliver on its promises in terms of price and schedule.

Meantime, there is grim denial that the contest is over, and that India has overlooked a partnership that they say includes two of the more robust European economies, Germany and the U.K., in favour of one with a country recently stripped of its triple-A credit status. One veteran of the Eurofighter campaign vows not to give up until India makes the first down payment to the French, which might not be for years, claiming that arms deals of this magnitude are in play “until money is in the bank.” BAE, one of the Eurofighter group partners, yesterday signalled that it was prepared to drop the price.

Delhi’s version of events is that, in an era of corruption scandals and an activist Supreme Court, it has played the selection process entirely by the book. Defence officials say that once the two models passed technical trials, the deciding factor was always going to be which was offered at the lowest price. They say the choice of Rafale, which some say came in $5-million cheaper per aircraft, was one of the cleanest decisions in India’s arms procurement history, with the minimum of political interference.

Defence experts, however, say other factors came into play in the form of investment agreements, whereby they were required to invest half the value of the contract back into India, and technology transfer. “The deal is beyond the aircraft,” says Uday Bhaskar, a Delhi-based defence analyst. “If I was in the shoes of France looking at India, I would go beyond the fighter to the next big-ticket items of civil nuclear power and the [nuclear]submarine arena.”

Bharat Karnad, a defence expert at the Centre for Policy Research in Delhi, says a likely bargaining chip was the prospect of the use of nuclear testing facilities in Bordeaux to shore up the thermonuclear shortcomings of India’s nuclear arsenal. Such collaboration would give them more confidence in their own deterrent in the long-running standoff with nuclear-armed Pakistan. “The Indian government can’t be blamed for misleading anyone. It was government-to-government from the very beginning. We wanted to know what things we would get with the fighter,” he says.

Competitors suspect the nuclear element played a part in the decision. “Dassault got very aggressive on price and then Sarkozy rounded out the deal at the very end, possibly with some side-deal involving nuclear energy,” one German official says.

Mr. Sarkozy, months away from a presidential election that promises to be a bitter fight, and Dassault are quietly triumphant. He has underlined his determination by saying the final negotiations had “the full support of the French authorities” and would include technology transfers “guaranteed” by the state.

Two years ago, even skeptical senior Indian diplomats expressed pleasure at a visit by Mr. Sarkozy that placed nuclear energy at the centre of French engagement. Mr. Sarkozy appeared determined to leverage the loyalty Paris earned in 1998 by not showing opprobrium at Delhi’s nuclear tests, which circumvented the nuclear non-proliferation treaty.

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