French Company, Dassault, Wins $10.4 Billion Indian Bid

French aerospace firm Dassault Aviation emerged as the preferred low bidder for a $10.4 billion contract to supply the Indian Air Force with 126 Rafale twin-jet combat aircraft.

In this last round of deal-making, Dassault has apparently beaten out Eurofighter, which is backed by Germany, Spain, Italy, and the United Kingdom, for the coveted Indian contract.

The Indian Defense Ministry and Dassault will now enter into exclusive negotiations until the contract is complete. However, the contract will not be official until signed by both parties in the next fiscal year. Indeed, Eurofighter has not yet conceded and might launch another lower bid to counter Dassault's proposal.

If and when a deal is signed, according to the French news agency Le Point, Dassault will have secured its first successful export sale for the Rafale, which was recently used in the Libyan conflict.

The deal caught the attention of people around the world as the Medium Multi-Role Combat Aircraft (MMRCA) selection process is the first call for bids launched by India, which has emerged as one of the world's leading importers of arms and military hardware. The company that is finally selected for the aircraft deal could potentially enter into a highly lucrative, longer-term relationship with the New Delhi government. India plans to spend between $50 billion and $80 billion on defense over the next five years, according to the New York Times.

Separately, the potential winning bid by Dassault and its implications would be good news for French President Nicolas Sarkozy, who is facing a tough re-election bid this year. The Dassault contract could help his chances, as it would highlight his efforts to boost French trade, particularly through his services as a key negotiator of large contracts between France and India.

Indian law requires that Dassault initially construct the first 18 aircraft before partnering with a local, Indian company to finish the rest of the 118 planes. The law also allows for Indian companies to gain knowledge of Western technology -- a clause that Sarkozy has supported when he said the Dassault deal would allow for significant transfers of technology guaranteed by the French state, as reported by the New York Times.

Dassault first sold combat planes - the Ouragan - to India in 1953.

Most contenders for the Indian contract -- even before the final round of bidding -- were Western companies. The Rafale and Eurofighter's Typhoon defeated bids from American companies Boeing and Lockheed Martin; a Russian company, and a Swedish firm. Such an impressive pool of contenders reflects how India is choosing to look westward to buy defense equipment as it seeks to replace its aging fleet of Russian-made jets.