As previously anticipated, India has decided to go in another direction with regards to the acquisition of Rafale fighter aircraft from France. It was originally planned to acquire 126 Rafale, 18 delivered straight from France and the remaining aircraft were to be produced locally under license in India.
Negotiations since 2012 have failed to produce an agreement and India now plans to purchase 36 aircraft directly from France. Assuming this goes through, India would follow Egypt as the second buyer of the Rafale outside of France.
This would mark a sharp turnaround for France which for a long time did not have any export customer for the Rafale. Meanwhile, other European aircraft such as the Typhoon and the Gripen have been able to secure contracts some time ago.
Two contracts for the Rafale in 2015 in just a few months would be quite an accomplishment. The number of aircraft sold may not be as high for France with 36 instead of 126, but more would be produced in France than was originally planned. It ties up India as a long-term customer and it's possible than India may purchase more in the future.
While a Rafale acquisition is a clear win for France, it's a different story for India. No aircraft are to be manufactured in India. Purchasing limited numbers of a new type of aircraft further aggravates the problem of India having too many types of aircraft in limited numbers making logistics more difficult.
A straight-up purchase of 36 aircraft is a compromise for India between the original plan and walking away. The latter option would be very hard to do after so much has been invested in the MMRCA project, which dates as far back as the late nineties.
However, in the long run India might be better off by not pursuing the original plan. That would have cost too much hard currency, which India has in short supply. By going for a smaller purchase, India frees up most of what would have been taken up by the Rafale leaving not much room for anything else. It may not be the ideal move for India, but it's better than what they were doing before.