We like and respect France as a nation, but we have learned from submarine(France) and carrier(Russia) deal. So it is better to have no deal then half deal. This deal is going to happen and it will be by the rules and with required ToT (which was promised). Even USA tried to use short cuts but no use.
Another Local factor to this deal, as no government is going to sign such a big deal just before elections. There will be corruption charges during elections even when deal is clean. So if India do not sign on the doted lines by September of this year, then I am afraid this deal might be cancelled or delayed by another 2 years.
Of course it will have severe effect on IAF. But all this hard bargain by French and delay is a blessing in disguise, as it is has already caused MoD and GoI to give highest priority to LCA. MoD is putting a lot of stress on ADA/HAL as well as on IAF to finish FOC by 2014.