Prime Minister Narendra Modi is determined to cut through red tape and finalise the Rafale fighter aircraft deal with France when he holds talks with French President Francois Hollande in Paris later on Friday night.

Prime Minister Narendra Modi is determined to cut through red tape and finalise the Rafale fighter aircraft deal with France when he holds talks with French President Francois Hollande in Paris later on Friday night.

Top sources have just confirmed that PM Modi is set to change terms of a major Rafale deal to buy a number of fighter aircraft off-the-shelf. Two biggest likely takeaways in this context from the Indian point of view are: (i) France has now offered more attractive terms for outright purchase of the Rafale fighter jets; and (ii) the strategic requirements of the Indian Air Force are being given utmost importance and priority.

A concerted effort is being made by Team Modi to strike a balance between national security needs and domestic manufacturing with Make in India component of the Rafale deal to be followed up later.

It is not yet clear how many Rafale aircraft will be purchased outright by India after the Modi-Hollande talk. It is expected that India will be buying at least 40 planes off-the-shelf at a total price tag of $4 billion.

The Modi-Hollande talks are scheduled for 7.30 pm India time. First, the two leaders will meet one-on-one and this will be followed by delegation-level talks.

Cost negotiations are already underway and this will be followed by technical consultations. Issues like the price, life cycle costs, repairs, spare parts and technology transfer will be taken by technical experts from the two sides. The broad principle on which the two sides are working is that France is now willing to give more attractive terms to India.

While technology issues will be discussed at length separately in follow-up meetings, the two sides are actively considering the 'Make in India' component in the deal. Naturally the heads of governments can’t be expected to get into the nitty gritty of technical details.

Incidentally, PM Modi himself has gone on record as saying thus to a French newspaper ahead of his arrival in Paris: "The question of the Rafales is still in discussion and we should be able to make progress on mutually acceptable bases."

One of the proposals being actively considered by the two sides is that Indian public sector company Hindustan Aeronautics Limited (HAL) will be making bulk of Rafale jets in India in close coordination with experts from the French company Dassault. However, Dassault won’t be held liable for penalties if, for whatever reasons, HAL is not able to deliver the jets on time.

The IAF is experiencing a major fighter jet shortage and currently has only 34 fighter squadrons against the ideal 43 squadrons. Moreover, at least eight more squadrons are likely to be phased out in the next eight years because of ageing planes.

Dassault Rafale had won the MMRCA (Medium Multi-Role Combat Aircraft) competition for 126 fighter jets in 2012. Rafale had edged past stiff competition from five other foreign fighter aircraft manufacturers Boeing F/A-18E/F Super Hornet, Eurofighter Typhoon, Lockheed Martin F-16 Fighting Falcon, Mikoyan MiG-35, and Saab JAS 39 Gripen.

A USP of the Rafale is that it has the advantage of being logistically and operationally similar to the Mirage 2000, which the IAF already operates and used with great success in Operation Safed Sagar during the Kargil War.

The Indian defence ministry has allocated $13 billion for purchase of these aircraft, the single largest defence purchase in the Indian history whenever it happens.

The writer, Firstpost Consulting Editor, is a strategic analyst who tweets @Kishkindha.