I am enjoying the various points made in this thread and think it is generally a good discussion being had, but speculation is sending the conversation in circles (above highlighted as an example but not as a sole knock against you Bar Brother). What we "know" is a step above what we can "infer" from observations. And both are light years beyond what we "suspect or believe", when discussing technologies and capabilities.
Something I tried to point out before, and others have spoken about as well, is the methodology behind the F-35 design. It was developed around the concept of Passive Stealth and Networked Warfare - building upon the US Navy's CEC model (Cooperative Engagement Capability). It's LO Design, Materials, Shared Sensors and Passive Systems all come together to create an aircraft that is able to achieve first Threat Detection and then prosecute the target.
Now your mileage may vary when coming up against other peer 5th Gen, Reduced Signature Aircraft. But the name of the game has always been see first, shoot first and 4th Gen aircraft will fundamentally never be able to match the F-35 or likely any other 5th Gen program in this regard. Air Warfare is a balance between how little you can emit/reflect while still being able to achieve a lock.
Those are current day, known tactics based on the latest technologies. It does not depend on a hush hush black project or research program. If you put stock in Active Cancellation as the trump to F-35's capabilities and the way it has been designed to fight, you need to show some hard evidence of operational use. I am unaware of Spectra currently employing Active Cancellation and I think you would have a hard time showing otherwise from a credited source (referring back to my first paragraph of circular speculation and articles based on the same).
Putting all of that aside and going slightly off-topic, if Rafale is the aircraft you claim it to be, why is this deal not done? There are plenty of MKI in service now, why not divert funds to the Rafale and up it's numbers? Why is the Indian Navy not joining in on the purchase? And why did Rafale lose all of those prior tenders? Let's be honest, if it was the F-35 / 5th Gen killer you claim, with Active Cancellation secret sauce to boot, it would be operating in at least 1 or 2 other countries besides France right now.
If Rafale has active cancellation, then the F-35 is no match to the Rafale. The opposite if false. As of today, there is no legitimate source saying Spectra is capable of active cancellation. There are only claims.
As for the Indian MMRCA deal, the deal has progressed most of the distance. The contract negotiations are done and the 15,000 page draft contract was handed to the Cost Negotiation Committee last month. They are negotiating the liability clause as far as open source information goes. It's a clause which says Dassault is responsible for delays in delivery of HAL manufactured jets.
As for why this deal hasn't been signed yet, the procedures for contract negotiations are pretty long in India. The negotiations between General Electric and ADA for the new F-414 engines took 3 years as well. The Rafale negotiations are actually proceeding really fast, this is especially considering 90% of the aircraft will eventually be made in India, placing a far greater emphasis on ToT and industrial production than in earlier deals. Extra production capacity can be used to export the aircraft to other countries too. If it was just license assembly, then the deal wouldn't have taken this long.
I don't see why funds from MKI have to be transferred to the Rafale. The issues plaguing the negotiations is not funds but bureaucratic procedures.
As for why Rafale has been losing, as already mentioned in some links, the costs were too high. Some countries like Singapore couldn't afford it. And as I had said a long time ago, stealth isn't a high priority for many air forces. If the same Singapore deal happened between Rafale and the F-35, the F-35 would have lost based on costs. Of course, they could always do a Korea and simply cancel the tender.
I also don't see why France will want to give away their best to other countries for very small amounts of money. India is a different case, we may eventually see more Rafales in Indian service than in France. So it makes sense for AdlA/MN and IAF to combine their funds and requirements to jointly develop newer technologies over the Rafale's lifetime, similar to what's happening with Russia. That is not the case with air forces that need between 18 and 60 jets. The fleet is too small to actually give away active cancellation technologies. And I'm pretty sure active cancellation will be a non-export technology for the US. But I guess France may be more willing when it comes to NATO countries, like the RNAF, while also leveling the playing field against the F-35 in Europe (currently the F-35's largest market).
I hope you do realize even the US considers active stealth technologies to be superior to passive technologies. They refer to active technologies as the next step in the evolution of stealth. Also, I don't see why it will be particularly surprising if France or any other country deploys it first, if not already deployed. There is a pretty big difference between the first to develop and the first to deploy.