In the second week of July, Britain is likely to send in Foreign
Secretary William Hague and finance minister George Osborne, a British
government source said on Friday.
Britain has drawn some cheer from the slow progress of the negotiations for the Rafale deal.
Britain has drawn some cheer from the slow progress of the negotiations for the Rafale deal.
Cost escalations and disagreements about building the Rafale in partnership with India's state-run Hindustan Aeronautics Limited have complicated talks with France, and London has never entirely given up hope that it will return to the race.
However, on Thursday, one source at the Indian defence ministry said the deal was likely to be finally closed during Fabius' visit and could be signed this year. A French foreign ministry source said talks were ongoing, but refused to provide more detail.
Russia, for years India's top weapons supplier, pipped all three countries to the post, sending Deputy Prime Minister Dmitry Rogozin to visit the new government in Delhi two weeks ago. Washington last year replaced Moscow as India's top defence supplier, according to IHS Jane's.
The Western nations will have noted that India's foreign minister expressed displeasure with Russia's recent offer to sell Mi-35 attack helicopters to India's arch-rival Pakistan.
"I don't think it's a competition," US Assistant Secretary of State Nisha Biswal said after an early post-election visit to New Delhi.
"India will have strong and positive relationships with a variety of countries and that is to be encouraged," said Biswal. "We want to see India taking on a stronger and a leadership role in the region and around the world so we welcome that."
$6 billion spree ::
India spent some $6 billion last year on weapons imports. It makes few of its own weapons, beyond ballistic missiles and assembly lines for foreign jets.
On Thursday, the government signalled it was in the mood for liberalisation by allowing manufacturers to build more defence components without licences, making it easier for Indian firms to partner foreigners.
At present foreign companies can only invest 26 percent in Indian defence projects without committing to technology transfer, which has put off many investors.
Before the election, sources in Modi's Bharatiya Janata Party said there was a plan to increase the cap to 49 per cent.
"For higher-tech intellectual property we would want to go over 50 percent to be in a position to share technology that we have significant investments in," said Phil Shaw, chief executive of Lockheed Martin India Pvt Ltd.
"An uplift from 26 to 49 percent maintains the status quo and may not be sufficient incentive to make an investment here."
Lockheed Martin already has a 26 per cent investment in an Indian joint venture with Tata Advanced Systems that manufactures airframe components for the C-130J Super Hercules cargo lifter.
India's Department of Industrial Policy and Promotion has circulated a discussion document that proposes allowing up to 100 percent foreign direct investment, or FDI, in defence production, two government officials told Reuters.
The note suggested allowing 100 percent FDI in manufacturing of state-of-the art equipment, one of the officials said. It also recommends a cap of 49 percent for investments which do not
Last week, Commerce and Industry Minister Nirmala Sitharaman said foreign investment in the sector would help increase defence preparedness of the country and reduce import dependence, saving billions of dollars in foreign exchange.
However, she said the government was yet to take a final call on increasing the FDI ceiling and the decision would be taken by Jaitley and Modi. The proposals face pockets of resistance in Indian industry, Modi's party and the military establishment.
AK Antony, who was India's longest serving defence minister until his Congress party's election defeat in May, said this week that allowing higher foreign investment in defence would be "suicidal".
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