India was aiming to agree a deal to buy 63 French-made Rafale fighter jets for $7.7 billion during Prime Minister Narendra Modi's visit to Paris starting on Friday, Le Monde newspaper reported.
Indian officials confirmed that a major push was on to reach an agreement to buy Rafales during Modi’s visit to Paris, with one holding out the prospect of an announcement – if not a final deal – if India is able to secure more favourable terms.
Talks have been going on for more than three years over how to resolve differences over pricing and local assembly.
"The discussions went on through the night and were still going on this morning," Le Monde quoted a source close to the matter as saying.
"The idea is to announce the contract during Indian Prime Minister Narendra Modi's visit to Paris on Friday or Saturday," the source said.
Neither Dassault Aviation, which builds the Rafale, nor the French president's office could be reached for comment. The French defence ministry declined to comment.
The Hindustan Times and a widely watched defence blogger said that a direct government-to-government contract to buy a smaller number of planes than the 126 originally envisaged under a tender deal was one possible outcome because of problems linked to localising production of most of the planes in India.
Blogger Nitin Ghokale said the talks focused on buying between 60 and 63 jets.
One Indian official, who requested anonymity, said, "It’s correct that discussions are under way, but a contract announcement is a bit of hype."
"If things work out and terms are more attractive than earlier, then maybe an understanding."
A source at the Indian defence ministry said that a “serious effort" was under way by both sides to reach a solution.
Modi, who in an interview on April 8 said the two countries should be able to make progress in talks on the Rafale, is in France for a two-day state visit. There is due to be a signing ceremony for various contracts late on Friday and a joint news conference with President Francois Hollande at 09:30 PM IST.
The original Rafale contract was worth $12 billion but was widely estimated to have increased to $20 billion, primarily because of the implications of building some of the jets in India. It is not clear how the Paris talks fit into that deal.
Analysts say Dassault's Rafale deal with Egypt in February may have helped break the logjam in negotiations with other customers since they are now on notice that if they want to have the Rafale they may have to wait for it.
India's military says it needs to start replacing its ageing jet fleet from 2017.