The Telegraph
Wednesday , July 2 , 2014
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France offers friendship and funds

Prime Minister Narendra Modi with French foreign minister Laurent Fabius in New Delhi on Tuesday. (PTI)

New Delhi, July 1: France today offered India a 1-billion-euro credit line to fund projects on sustainable infrastructure and urban development, a move many see as a sweetener for the $10-billion Rafael fighter jet deal.

French foreign minister Laurent Fabius is the first of a string of politicians from Western nations arriving in New Delhi over the next few weeks. They are drawn in part by the prospect of defence deals, as the new government considers opening the industry to foreign investment.

Fabius today said this credit line would be available over three years.

Fabius, who supports Modi’s plan to have a ‘saffron revolution’ to provide solar power to 400 million Indians, said, “If you don't have the share of technology and the share of finance, you can develop brilliant ideas, may be brilliant, but (you will have) nothing concrete.”

Officials saw Fabius’s offer as not only a bid to sweeten the Rafael deal but also a move to win France new projects in the clean energy sector. Other western powers, including the US, the UK and Germany, are also interested in this sector.

France has indicated it is interested in co-operating with India in the green sector, including carbon-free energy, civilian-nuclear energy, water and urban development.

The deal to buy 126 Rafale fighter jets has drawn flak from experts. Analysts have said that Dassault, which makes the Rafael jets, do not have too many bookings and without the Indian order may well have shut down the line.

Mohan Guruswamy, president of the Center for Policy Alternatives, said in a social media post: “I think we should reconsider this acquisition. The costs are out of control.”

He advocated that India should seek to shift the production line to India to keep control over possible cost escalations.

Fabius today indicated that France was interested in sharing defence technology with India and said “to be honest and candid, you have a diminution of the defence budget in Europe ... and therefore (the deal is in) our interest.”

India chose Dassault Aviation’s Rafale in 2012 over other international jet manufacturers, but disagreements over cost and work-sharing have slowed talks, while India's weak economy has stretched government finances.

No final contract has been signed and rivals, including Britain, still hold out hope that the deal will fall through.

Last year, Dassault Aviation and Reliance Industries had announced a joint venture to build components and eventually assemble the Falcon series business jets in India.

Aviation industry sources said the joint venture could also build parts for the Rafael jets, which India has selected for the air force.

The Indian government, however, had been insisting that parts for the jets should be manufactured by another venture involving state-run HAL.