India's plans for the purchase of 114 Rafale fighter planes are nearing a decision that could make it the nation's biggest defence deal ever. However, the numbers of jets involved is not the key point of the programme. New Delhi is trying to leverage an emergency military demand to create an aerospace manufacturing ecosystem which could last well post the last Rafale.

India is looking to conclude the Multi-Role Fighter Aircraft (MRFA) project in the ongoing financial year "barring any aberration in negotiations," Air Chief Marshal A.P. Singh said on Saturday. Other contractual matters are still up for discussion, including price. The approximate value of the programme is approximately ₹3.25 lakh crore.

It is not possible to miss the urgency. Indian Air Force is in need of around 36–40 new fighters annually over the next few years just to restore and maintain the combat strength of its fleet, Singh said. The IAF has already placed an order for 180 Tejas Mk1A fighters, but the production of native aircraft does not have the capacity to immediately replace the retiring aircraft in the required numbers. Hence, the Rafale programme is being seen to increasingly become a betwixt and between between the current shortage of indigenous fighter planes and the future indigenous fighter fleet.

With all the 114 aircraft contracts forged, India's Rafale force would be of 176 fighters: 36 already in the service of the IAF, 26 Rafale-Ms already ordered for the Navy and remaining 114 for the Air Force. That would make one of the biggest Rafale squadrons outside of France and form a common aircraft family for land-based and carrier aviation.

The number of aircraft, though, may be less significant than the industrial sector. Earlier reports suggested that around 90 out of the total 114 fighters would be made in India and not supplied as whole planes from France. The final level of localisation is left to the contract and prospective content has reached about 60 per cent for February.

It's no longer a future promise of localisation. Dassault Aviation and Tata Advanced Systems have already started laying the foundation of Rafale's fuselage facility at Hyderabad. Dassault claims the production of the fuselages for Rafale will be the first outside France, and will include the front and central fuselage, the rear section and lateral shells. It is expected to commence production in FY2028, to be scaled up to two full fuselages per month. Currently, Dassault's supply chain in India comprises over 30 companies.

This affects the economics of the purchase.

The country's defence exports hit a record high of ₹38424 crore, an increase of ₹62.66 crore or 62.66 per cent in a year, whereas the country defence production was at a record of ₹1.78 lakh crore, which saw a 15.6 per cent rise in a year. Currently, 24 per cent of defence production and over 45 per cent of exports are generated by private companies. A programme so large as the Rafale could extend the high value skills in precision machining, composites, avionics, electronics, maintenance and aerospace certification, instead of just creating assembly jobs.

The numbers also provide a rationale for why negotiations can't be boiled down to the sticker price. India's total defence budget for 2026-27 is ₹7.85 lakh crore of which ₹1.85 lakh crore has been allocated for capital acquisition. The Rafale programme, then, costs some ₹3.25 lakh crore, which is equivalent to nearly 1.76 times the total allocation for capital acquisition for a year. Obviously payments would be piecemeal over a few years but financing, localisation, life cycle expenses, maintenance and technology access are all becoming significant factors with the size of the procurement.

Another significant move has come out of the talks. Defence Secretary Rajesh Kumar Singh stated that Dassault has consented to include Indian arms on the plane. This is significant because strategic autonomy does not stop at the point of assembly within the country. The capability to incrementally add Indian weapons and systems is what defines the extent to which the operator has to rely on the foreign manufacturer over the decades-long service life of the fighter. French firm agrees to integrate Indian weapons, delivery of ‘Rafale' likely by FY-end:

However, there is a bigger question on the buy: AMCA.

The indigenous Advanced Medium Combat Aircraft is designed to provide the fifth-generation capability to which the Rafale, even after its continual upgrades, is not entirely adequate. The Defence Secretary has said it expects to see a prototype flight in September 2028. The Air Chief has now publicly stated that if AMCA faces significant delays, India might have to head towards another foreign platform, and that Russia has extended the offer of the Su-57, but there has been no decision as yet.

This is where the Rafale decision comes in. India needs aircraft soon but does not want to deplete the capacity, budget and engineering resources of the country for a large programme of foreign aircraft, let alone an Indian fighter engine.

The stakes are just as high for France. The 114 order would provide years of production for Dassault and its partners, and continue to make France an integral part of India's military aviation structure. In French parliamentary testimony earlier this year, it was acknowledged that the Indian proposal calls into for making a significant amount of aircraft in India, through local final assembly.

In India, the standard yardstick for this agreement will not be the number of 114 Rafales delivered.

It will be either ₹3.25 lakh crore fails to purchase something longer lasting: an Indian production line, Indian weapons integration, a greater domestic supply base, increased maintenance independence and skills that can transfer to the next generation of Indian fighters.

There is a definite need of aircraft in India. The bigger goal, however, is to make sure that the nation that flies the next 114 Rafales picks up a lot more industrial capability to manufacture the aircraft that will eventually replace them.