Rafale deal signals key shifts in India's defence plan

Significance

The Indian and French governments have yet to finalise a price for the aircraft, but the deal was struck directly between Modi and his French counterpart Francois Hollande. The deal sets new precedents for India's approach to defence acquisition and manufacturing.

Impacts

• Delhi will probably put the original 126-Rafale aircraft agreement of 2012 indefinitely on hold or even cancel it.
• Foreign vendors who lost to Rafale could sue the Indian government, but they may not be able to sustain the challenge in Indian courts.
• An opaque defence deal signed under the Modi government risks being challenged under a different government in future.
• Indian public sector firms will maintain their dominance for many years, but increasingly cede ground to domestic private players.