French Defence Minister Jean-Yves Le Drian said Friday talks over a $12-billion deal to sell Rafale jets to India were progressing well and that a new bilateral pact would underpin the deal.

India initially set a target of the end of last year to conclude the purchase of the 126 aircraft, one of the biggest ever defence deals, but deadlines have repeatedly slipped.

With India set to go to the polls for national elections in the first half of next year, experts believe that the chances of a speedy conclusion are dwindling.

"I will not be announcing the date for signing the contract but I would like you to know that the negotiations are going well and I have full confidence," Le Drian told reporters during a trip to New Delhi.

He added that a "framework Indo-French inter-governmental agreement for this contract" would be signed which would "provide all the necessary guarantees of the French state".

Dassault Aviation beat off stiff competition from six rivals from Russia, the United States and Europe last year when India selected its state-of-the-art Rafale jet.

The huge, complicated contract would see the manufacture of the first 18 planes in France with the remainder to be produced under licence by Hindustan Aeronautics Limited (HAL), a state-run Indian aerospace behemoth.

Dassault is reported to have reservations about the ability of HAL to produce the planes and its own financial liabilities in the event that the jets are not made up to standard.

The group said in February that it hoped to sign its first export contract this year for the aircraft, which has been in action in Afghanistan, Libya and Mali most recently.

Le Drian said he had discussed the Rafale deal with his Indian counterpart A. K. Antony in a meeting earlier on Friday.

"I am not at all concerned about the delays (in signing the Rafale deal). I feel the pace of progress is perfectly normal for a project of this magnitude," he said.

Rafale's main rival, the Eurofighter made by European group EADS, has remained in India and is still hoping to win the deal in case Dassault is unable to conclude the negotiations successfully.

Dassault and the French government are in turn hoping that India's choice will send a positive signal to other potential buyers of the Rafale, including Brazil, which is in the market for 36 planes, Canada, Malaysia and the United Arab Emirates.

India, which is surrounded by hostile neighbours, is ranked as the world's biggest importer of defence equipment, buying up to 80 percent of its weapons from overseas.

The French defence minister also sought to reassure New Delhi over the progress on the building of six Scorpene submarines that have been dogged by huge delays and cost overruns.

The Scorpenes have been under construction by French company DCNS at a shipyard in Mumbai since 2005 and the first delivery is only expected next year.

There is "complete transfer of technology" and co-operation with the Indian industry on the Scorpene deal, the minister said.

He also said the updating of Mirage jets that India bought from France in 1980 was proceeding well.

The Mirage fleet is being modernised by French experts in central Madhya Pradesh state.

"At the end of this upgrade, the aircraft will match the most modern standards and continue to be in service for many more years," Le Drian said.

abh/pmc/ia

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