Blow for BAE as India picks Dassault jet

The Indian government said yesterday it was entering into exclusive talks with the French company Dassault Aviation to provide 126 jets, delivering a devastating blow to the Eurofighter consortium that was hoping to secure the $12bn deal.

Dassault's Rafale and the Eurofighter, produced by a four-nation consortium including Britain's BAE Systems, had been whittled down from a shortlist of six last year and industry observers had been anxiously awaiting the opening of sealed bids that contained the costs of each company's pitch. It appears the French bid came in just a few million dollars cheaper.

"The Indian government has decided to go into contract negotiations with Dassault. We are disappointed that Eurofighter is not moving forward," said an official at the British High Commission in Delhi.

The official said it was not inconceivable the Indians could yet reject the French offer and turn to the Eurofighter.

James Hardy of IHS Jane's Defence Weekly said: "It's a big win for the Dassault and the Rafale, its first overseas order, after a couple of big disappointments in Brazil and UAE, and a big loss for Eurofighter. The Typhoon was widely tipped to be the favourite and had major political support from the big beasts of the Eurofighter nations."

He added: "However, it is important to note that this is just the first step. Rafale has been selected as preferred bidder but any student of Indian procurement knows that this means nothing until the contract is physically signed."