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==Background==
{{Further|Indian MRCA competition}}
On 31 January 2012, Indian Ministry of Defence announced that [[Dassault Rafale]] had won the [[Indian MRCA competition|MMRCA]] competition to supply Indian Air Force with 126 aircraft along with an option for 63 additional aircraft. The first 18 aircraft were to be supplied by [[Dassault Aviation]] fully built and the remaining 108 aircraft were to be [[Licensed production|manufactured under license]] by [[Hindustan Aeronautics Limited]] (HAL) with transfer of technology from Dassault. Rafale was chosen as the lowest bidder based on life-cycle cost, which is a combination of cost of acquisition, operating cost over a duration of 40 years and cost of transfer of technology.<ref>{{cite news |last1=Pandit |first1=Rajat |title=French jet Rafale bags $20bn IAF fighter order; India 'briefs' losing European countries|url=https://timesofindia.indiatimes.com/india/French-jet-Rafale-bags-20bn-IAF-fighter-order-India-briefs-losing-European-countries/articleshow/11706551.cms |work=The Times of India |date=1 February 2012}}</ref> The negotiations with Dassault dragged on over disagreements on warranty for aircraft produced by HAL. India wanted Dassault to ensure the quality of aircraft produced by HAL, but Dassault refused to do so.<ref>{{cite news |last1=Prusty |first1=Nigam |last2=Kotoky |first2=Anurag |title=Government's $15 billion Rafale deal faces delays: sources |url=https://in.reuters.com/article/india-rafale-deal/governments-15-billion-rafale-deal-faces-delays-sources-idINDEE93403Z20130405 |work=Reuters |date=5 April 2013}}</ref><ref>{{cite news |last1=Datt |first1=Gautam |title=HAL's poor track record overshadows IAF plans to buy 126 Dassault Rafale jets |url=https://www.indiatoday.in/india/north/story/rafale-jets-hal-hindustan-aeronautics-limited-iaf-dassault-aviation-158290-2013-04-05 |work=India Today |date=5 April 2013 }}</ref>
In January 2014, it was reported that the cost of the deal had escalated to $30 billion ([[Indian rupee|₹]]1,86,000 crore), with each aircraft costing $120 million (₹746 crore).<ref>{{cite news |last1=Sagar |first1=Pradip R |title=dna exclusive: 100% price escalation on Rafale fighter aircraft to Rs 1.75 lakh crore likely to dent IAF's strike capability |url=https://www.dnaindia.com/india/report-dna-exclusive-100-price-escalation-on-rafale-fighter-aircraft-to-rs-175-lakh-crore-likely-to-dent-iaf-s-strike-capability-1957107 |work=Daily News and Analysis |date=26 January 2014}}</ref> In February 2014, defence minister [[A. K. Antony]] said that the procedure of calculation of life-cycle cost was being re-examined and the contract could not be signed in fiscal year 2013-14 due to budgetary constraints.<ref>{{cite news |title=Fighter jet deal put off to next fiscal due to budget constraints: Antony |url=https://www.thehindubusinessline.com/economy/policy/fighter-jet-deal-put-off-to-next-fiscal-due-to-budget-constraints-antony/article20722943.ece1 |work=The Hindu Business Line |date=6 February 2014 }}</ref> In March 2014, HAL and Dassault signed a work share agreement to manage logistics of license manufacture.<ref>{{cite news |last1=Gokhale |first1=Nitin |title=A big step in India's Rafale jet deal with France |url=https://www.ndtv.com/india-news/a-big-step-in-indias-rafale-jet-deal-with-france-552565 |work=NDTV |date=3 March 2014}}</ref> After the [[2014 Indian general election]] in April–May 2014, [[National Democratic Alliance (India)|National Democratic Alliance]] led by [[Bharatiya Janata Party]] took control of the government from [[United Progressive Alliance]], led by the [[Indian National Congress]]. As disagreements over cost and warranty for aircraft produced by HAL continued, defence minister [[Manohar Parrikar]] said that [[Sukhoi Su-30MKI]] could be acquired as an alternative to Rafale.<ref>{{cite news |title=Rafale fighter jets deal: Ball is in France’s court, says India |url=https://www.thehindubusinessline.com/economy/logistics/rafale-fighter-jets-deal-ball-is-in-frances-court-says-india/article20950141.ece |work=The Hindu Business Line |agency=Press Trust of India |date=4 January 2015 }}</ref><ref>{{cite magazine|last1=Menon|first1=Jay|last2=Bruneau|first2=Caroline|last3=Svitak|first3=Amy|date=16 February – 1 March 2016|title=Rafale Riposte|url=http://aviationweek.com/defense/france-india-disagree-over-key-rafale-contract-issue|magazine=Aviation Week & Space Technology|volume=177|issue=3|page=54|location=New York|issn=0005-2175}}</ref><ref>{{cite news |last1=Shukla |first1=Ajai |title=Parrikar outlines alternatives to Rafale |url=https://www.business-standard.com/article/economy-policy/parrikar-outlines-alternatives-to-rafale-115011300014_1.html |work=Business Standard |date=13 January 2015}}</ref> Air Chief Marshal [[Arup Raha]] disagreed, saying that Su-30MKI and Rafale had different capabilities and one could not replace the other.<ref>{{cite news |title=Sukhoi cannot replace Rafale: Arup Raha, IAF chief |url=https://economictimes.indiatimes.com/news/politics-and-nation/sukhoi-cannot-replace-rafale-arup-raha-iaf-chief/articleshow/46300909.cms |work=The Economic Times |agency=Press Trust of India |date=30 March 2015}}</ref> In February 2015, it was reported that the Rafale purchase was headed for cancellation as it was misjudged to be the lowest bidder due to an incomplete bid submitted by Dassault.<ref>{{cite news |last1=Shukla |first1=Ajai |title=Rafale proposal 'effectively dead' as Dassault bid not cheapest |url=https://www.business-standard.com/article/economy-policy/rafale-proposal-effectively-dead-as-dassault-bid-not-cheapest-115021600056_1.html |work=Business Standard |date=16 February 2015}}</ref> During an official visit to France in April 2015, Indian prime minister [[Narendra Modi]] announced that India would acquire 36 fully built Rafales citing "critical operational necessity".<ref>{{cite news |title=India to buy 36 Rafale jets in ready condition |url=https://www.thehindu.com/news/national/prime-minister-narendra-modis-visit-to-france/article7090006.ece |work=The Hindu |agency=Press Trust of India |date=10 April 2015 }}</ref> In July 2015, defence minister Manohar Parrikar informed the [[Rajya Sabha]] that the tender for 126 aircraft had been withdrawn and negotiations for 36 aircraft had begun.<ref>{{cite news |title=Govt withdraws tender for 126 medium multi role combat aircraft: Manohar Parrikar |url=https://www.thehindubusinessline.com/economy/policy/govt-withdraws-tender-for-126-medium-multi-role-combat-aircraft-manohar-parrikar/article7481721.ece |work=The Hindu Business Line |agency=Press Trust of India |date=30 July 2015 }}</ref> In January 2016, India and France signed a memorandum of understanding for acquisition of 36 aircraft.<ref>{{cite news |last1=Peri |first1=Dinakar |title=Rafale deal: only MoU signed |url=https://www.thehindu.com/news/national/Rafale-deal-only-MoU-signed/article14022630.ece |work=The Hindu |date=27 January 2016 }}</ref> In September 2016, after 17 months of negotiations, India and France signed an inter-governmental agreement (IGA) for the acquisition of 36 aircraft at a cost of €7.87 billion (₹58,891 crore).<ref name="hindu-iga-signed">{{cite news |title=India, France ink €7.87 billion agreement for 36 Rafales |url=https://www.thehindu.com/news/national/India-France-ink-%E2%82%AC7.87-billion-agreement-for-36-Rafales/article14995775.ece |work=The Hindu |date=23 September 2016 }}</ref><!-- Using conversion rate of ₹74.83 per € on the date of signing the agreement from https://www.xe.com/currencytables/?from=INR&date=2016-09-23--> According to ''The Hindu'', citing defence sources, the agreement involved many components, which were better compared to the original deal, especially the weapons package.<ref name="hindu-iga-signed"/> It was reported that India would acquire 28 single-seat aircraft at a cost of €91.1 million (₹681.7 crore) each and 8 dual-seat aircraft at a cost of €94 million (₹703.4 crore) each. The deal also included enhancements specific to Indian Air Force at a cost of €1.8 billion (₹13,470 crore), spares and establishment of two aircraft maintenance and overhaul facilities at a cost of €1.8 billion (₹13,470 crore), a weapons package costing €710 million (₹5,313 crore) and a [[performance-based logistics]] agreement at a cost of €353 million (₹2,641 crore).<ref>{{cite journal |last1=Bedi |first1=Rahul |title=Details emerge on cost of India's Rafale deal |journal=IHS Jane's Defence Weekly |date=28 September 2016 |volume=53 |issue=47 |publisher=Jane's Information Group}}</ref>
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