The delayed approval for the acquisition of the M-777 ULH means that India will have to bear a much higher price because of the weaker rupee.
The tender to manufacture the C-295 was the first aircraft procurement plan especially intended by the IAF and the defense ministry to be solely partnered in India by private industry.
Dassault can wait to have their way in the MMRCA negotiations knowing the aversion of the IAF and defense ministry to a re-tender, unless the defense ministry walks away from the table itself, first.
After confusion over who would decide the commercial aspects of the order, the case is set to move to the Defense Acquisitions Council (DAC), headed by the defense minister, for Acceptance of Necessity (AoN).
The 37 percent escalation by a margin of roughly INR 1,200 crore for the US government offer to India for 145 M-777 light weight howitzers comes into effect on Tuesday, along with the imminent closure of the assembly line for the artillery.
India has ordered a total of 123 aircraft, with the navy order for 17 aircraft being part of the contract for 57 aircraft concluded in 2010. 40 of the aircraft will be delivered to the IAF.
Carter is looking at the Indian defense ministry to make it easier for US companies to do business with it and wants resolution of issues related to offsets, limitation of liability and delays in decision-making.
The failure to consider the order by the DAC has wider implications as it is unlikely that any decision can be taken on this order by October 15, after which the value of the deal will see a 37 percent hike.
The Acceptance Of Necessity (AON) was cleared by the Defense Acquisitions Council (DAC) in February, 2012 and at the time, the order was estimated to be worth around USD 1 billion.