France's Dassault Rafale wins IAF's biggest fighter jet deal

The government has decided to buy 126 French-made Rafale combat aircraft for the Indian air force, clinching a massive $11 billion defence deal, a top official said Tuesday.

The French aviation company Dassault snapped up the $11 billion deal after emerging with the lowest bid in a two-way competition against the Eurofighter Typhoon aircraft, the official said.

Planes from Boeing Co. and Lockheed Martin of the United States and from Russian and Swedish makers were dropped from consideration earlier.

The deal is the first foreign deal for Dassault's fighter jets. The deal would be a huge shot in the arm for Dassault, which has struggled to find a foreign buyer for the multi-role Rafale, billed as one of the most effective fighters in the world but also one of the most expensive. The company's shares soared almost 21 percent on Tuesday.

India, the world's biggest arms importer, is being wooed by major international arms manufacturers as it replaces its obsolete Soviet-era weapons.

Eighteen fighter aircraft will be delivered in ''fly away'' condition within 36 months and the remaining 108 are to be built by state-owned Hindustan Aeronautics Ltd. through technology transfers.

Defence ministry experts were still fine-tuning pricing details, including the cost of on-board weaponry and royalties for producing the aircraft in India.

"The French firm Dassault Rafale has emerged as the L-1 (lowest bidder) and cheaper than its european rival EADS (maker of Eurofighter) in the tender and will be offered to supply the aircraft to the IAF," the source said.

They said the representatives of Dassault here were informed about the development in the morning and further negotiations on price will be held with them in the next 10 to 15 days.

Six companies including American F-16 and F-18, Russian MiG 35, Swedish Saab Gripen alongwith Eurofighter and Dassault Rafale were in the race in the beginning.

But in April last year, the Defence Ministry shortlisted Dassault and EADS, evicting the American, Russian and Swedish bids.

The process was started with the issuing of a global tender in 2007 after which all the six contenders were subjected to extensive field evaluation trails by the Indian Air Force at several locations across the globe.

The defence ministry had said earlier that India would not sign a multi-billion dollar contract to buy European fighter jets before the fiscal year ends in March. The deal is to revamp ageing weapons in line with the country's rising global influence.

Not this financial year, Defence Minister A.K. Antony told Reuters in reply to a question about when the deal that has been in the works since 2007 would be signed.

However, government sources told Reuters about the $15 billion deal that France's Rafale jet was the likely winner, adding that the defence ministry was now considering buying another 80 or so jets and could invite bidders excluded from the current process to take part.

Already Asia's third-largest economy and growing fast, India has emerged as the world's leading importer of weapons as it jostles with China for influence and reach on the world stage.

Dassault's Rafale is competing with the Typhoon fighter made by four-nation consortium Eurofighter in what is currently one of the largest global weapons tenders.

''It is a long process. The file has not come to my table,'' Antony said, adding that the finance ministry and a Cabinet panel headed by the Prime Minister have to look at the agreement after he signs off.

The Eurofighter Typhoon is built by the German and Spanish branches of EADS, Britain's BAE Systems and Italy's Finmeccanica. Dassault is French. American, Russian and Swedish bids were rejected in April.

The U.S. company Lockheed Martin has kept alive hopes of selling its F-35 Joint Strike Fighter to India.

One defence ministry source with knowledge of the negotiations said the life-time cost of the tender including training and maintenance may reach $15 billion.

Previous estimates put the cost around $11 billion.

The Defence Ministry source said each Rafale was $4 million to $5 million cheaper than its rival and the plane was preferred by the Air Force.

Unit-wise, the French plane is much cheaper than the Eurofighter. Moreover, the Indian Airforce, which is well-equipped with French fighters, is favouring the French fighter, said the source, who asked not be named.

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