French firm Dassault has won a multi-billion-dollar contract to provide 126 fighter jets to the Indian military, a government source in New Delhi told AFP on Tuesday.
Dassault will sell its Rafale multi-role jet to India after beating the Eurofighter consortium to secure the long-awaited contract, which is estimated to be worth $12 billion.
“You can take it as confirmed that Dassault has got the deal. Since there were only two companies and it has come out as the lowest bidder,” the government source told AFP.
The French government also confirmed Dassault’s victory.
“We have won the contract,” French Minister of State for Foreign Trade Pierre Lellouche told France’s BFM radio, while adding that “a certain number of things remain to be finalised.”
Dassault Aviation shares soared more than 20 percent on the Paris Stock Exchange after the news broke.
Discussions: New Indian Air Force Fighter competition
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The huge contract to supply war planes to fast-developing India has been fiercely fought over for four years.
India in April pulled a surprise by cutting out US bidders Boeing and Lockheed Martin — much to Washington’s disappointment — as well as dropping Sweden’s Saab AB and the Russian makers of the MiG 35 from the race.
Dassault’s rival, Eurofighter, which had pitted its Typhoon aircraft against the Rafale, is a consortium of Britain’s BAE Systems, Italy’s Finmeccanica and the European Aeronautic Defence and Space Company (EADS).
James Hardy, Asia-Pacific Editor of Jane’s Defence Weekly, said the decision was “a big win for the Rafale” but warned that a final deal was still far from certain.
“Rafale has been selected as preferred bidder but any student of Indian procurement knows that this means nothing until the contract is physically signed,” Hardy said.
He predicted that the recent sharp depreciation of the Indian currency and “standard contractual wrangling” could delay the deal for years.
The tendered contract was for the outright purchase of 18 combat aircraft by 2012 with another 108 to be built in India with options to acquire more.
Such a large order attracted strong lobbying during visits to India by US President Barack Obama, French President Nicolas Sarkozy, British Prime Minister David Cameron and Russian President Dmitry Medvedev.
India, the biggest importer of military hardware among emerging nations, issued the request for proposals in 2007 and trials of aircraft from the six companies competing for the deal began a year later.
The procurement of the fighter jets is a key part of India’s military upgrade programme, aimed at securing its borders against rivals Pakistan and China.
Dassault’s Rafale plane and the Eurofighter Typhoon were both in action over Libya last year during the international operation to enforce a no-fly zone and protect civilians from Moamer Kadhafi’s forces.
Both plane makers were relying on the contract to secure their futures amid falling defence budgets in developed markets, with Dassault also keen to sign up the first foreign buyer for its Rafale plane.
International consultancy firm KPMG estimates New Delhi will hand out military contracts worth $112 billion by 2016.
