French and Indian defence officials are to hold fresh talks Tuesday on the purchase of 36 Rafale jets, with hopes drawn-out negotiations on the multi-billion-dollar deal are close to concluding, an official said.

The talks are going ahead in New Delhi after the French side agreed to an Indian government demand for future investment in the country as part of the deal, the Economic Times said.

A government official told AFP he was confident the talks in New Delhi would "take the deal to the final stage" but declined to comment on any agreement on investment.

"If all goes well, a government-to-government agreement will be signed soon. It will most likely take a month before the final pact is signed," the official said.

During a visit to France in April, Indian Prime Minister Narendra Modi announced that New Delhi had ordered 36 of the "ready to fly" planes, worth an estimated 5 billion euros ($5.6 billion).

But a sticking point has been Delhi's standard requirement that arms makers invest a percentage of the value of any major deal in India, known as the offset clause.

The Economic Times, quoting unnamed sources, on Tuesday said the French have agreed in principle to a 50 percent offset clause.

Stephane Reb, the French defence ministry's senior military procurement officer, will head the negotiating team, the daily said.

The deal is a long way short of plans in 2012 under the previous Indian government to buy 126 Rafale jets from French manufacturer Dassault Aviation as part of a $12-billion deal.

After coming to power last May, the Modi government dashed lingering hopes over that deal, saying the country would only buy 36 because they were "way too expensive".

India is in the middle of a major upgrade of its ageing military hardware, a modernisation programme worth about $100 billion, partly to keep up with rival neighbours Pakistan and China.

Modi also wants to end India's status as the world's number one defence importer and to have 70 percent of hardware manufactured domestically by the turn of the decade.