India and France on Monday have agreed to push ahead with a $15 billion deal under which India will buy 126 Rafale fighter jets.
India's newly-appointed Defence Minister Manohar Parrikar held consultations with his French counterpart Jean-Yves Le Drian and agreed to "take forward the strategic co-operation between the two countries."
France's Dassault Aviation was chosen in January 2012, over six-other global bidders, supply the medium multi-role combat aircraft (MMRCA).
Discussions had remained stuck over the "modalities" of technology transfer.
India is the world's largest arms importer, while France is the world's third largest exporter of conventional weapons.
The Indian Air Force needs to upgrade its fleet strength early, as up to 40% of its current airplanes are said to be their "last legs."
Parrikar will have to balance the "Make in India" mantra with the reality of International arms trade.
The MoD is yet to accept the terms proposed by Rafale's manufacturers, Dassault, which would see the first 18 jets being imported fully built, and the rest to be manufactured under license by India's Hindustan Aeronautics Limited (HAL). Four sub-committees were formed in January 2012, to study the contract, which would see the complexities of technology transfer, pricing and the work share between Dassault and HAL.
The deal remains stuck over Dassault's reluctance to accept responsibility for the 108 planes to be built by HAL, in terms of liquidity damages and timelines for production; the French manufacturer has made it clear that it could not logically guarantee what HAL produces. The last 60 planes from the batch are slated to be 90% indigenised .
HAL has experience in local manufacturing, given the Russian Sukhoi Su-30MKI produced and inducted into the IAF successfully.
The original tender valued the deal at $10.4bn, though the cost escalation is expected to up the deal value in the range of $17-20bn.
The deal harbingers good tidings for the French domestic defence industry and would enable India to take a significant leap in terms of aircraft technology, where it seeks to replicate the success it has achieved in the space exploration domain.
Final negotiations are expected to be concluded by the end of March 2015.
The two countries also discussed the investment opportunities for the French defence industry under the "Make In India" mantra of the right-wing NDA Government.