"Unless there are any unforeseen complications, the jet fighter contract should happen soon. The price has been substantially lowered after several rounds of tough negotiations," the source told The Economic Times newspaper.
The deal is expected to be approved at the next meeting of India's Cabinet Committee on Security, according to the media outlet.
The newspaper added that half of France's revenue from the deal would be invested in the Indian defense and aviation sectors in accordance with the contract.
Rafale jets deal was announced in April 2015 during Indian Prime Minister Narendra Modi's visit to Paris but negotiations on pricing have protracted for over a year.