The talks come after France has reportedly agreed to a condition that planemaker Dassault Aviation invest a large percentage of the value of the contract in India, through activities such as the sourcing of components for future French operations.
A government official told AFP that he was confident the talks in New Delhi would "take the deal to the final stage", while the Economic Times reported that the French have agreed in principle to a 50 per cent offset clause.
Stephane Reb, the French defence ministry's senior military procurement officer, is heading the negotiating team.
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.
That was after three years of original negotiations to buy 126 planes from Dassault had been stalled over disagreements on cost and where the aircraft would be assembled.
India wanted the twin-engine fighters to be built by India’s state-run Hindustan Aeronautics in Bengaluru.
India has launched a vast defence modernisation programme to keep up with its rival neighbours Pakistan and China.
Dassault, meanwhile, began delivering Rafale jets to Egypt this summer, the first sold abroad in the 14 years it has been building the versatile but hard-to-sell plane. Qatar has also placed an order for the planes this year.