The issue came up for discussion during the delegation- level talks last evening between Defence Minister Manohar Parrikar and his French counterpart Jean-Yves Le Drian.
"The talks were held in a cordial atmosphere. All issues related to India-French defence cooperation were discussed," Defence Ministry Spokesman Sitanshu Kar said.
Asked about the Rafale deal, he said both sides agreed there were matters on which differences still exist between the two sides and that this would be resolved in a "fast-tracked manner".
India had in 2012 selected the Rafale jet but the final negotiations are still continuing between the Defence Ministry and Dassault Aviation.
The deal with India is a big one for the Rafale fighter as it will be the first mega export order for the aircraft.
Though the deal was first valued at about USD 10 billion in 2007 when the Request for Proposal (RFP) was issued, the figure has shot up to over USD 15 billion, sources said.
Differences have cropped up over various issues from pricing to work-sharing.
As per the RFP, the first 18 jets are to be imported and the rest manufactured under licence by Hindustan Aeronautics Ltd (HAL).
According to Defence sources, Dassault was reluctant to stand guarantee for the 108 fighters to be built by HAL as far as liquidity damages and timelines for production was concerned.
This, the sources say, is the critical issue that is delaying the inking of the deal.
The Defence Ministry is of the view that the guarantee clause was part of the Air Staff Qualitative Requirements (ASQR) under the RFP.
Dassault had agreed to the ASQR and hence was selected for the deal, sources maintained.
"How can the ASQR be relaxed? This is not allowed under the Defence Procurement Procedure, 2013," the sources said.

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