France's Dassault Wins $11bn Deal in India

India's decision to buy 126 French-made Rafale fighter jets for its airforce in a massive $11 billion deal could be the much-needed boost to the re-election bid by Nicolas Sarkozy, the French President.

This French victory over rival Eurofighter Typhoon (made by EADS and financed by a four-nation consortium that includes Britain, Germany, Spain and Italy) comes at a crucial time for Sarkozy who is facing a difficult re-election bid in May 2012. Sarkozy is likely to make political capital out of it and seek to augment his chances to be re-elected. Serge Dassault, the Chairman and CEO of Dassault Aviation, the makers of the plane, is a right-wing Senator and member of the ruling conservative UMP Party.

"The negotiation of the contract will begin very soon with the full support of French authorities. It will include major transfers of technology guaranteed by the French state," Sarkozy said.

In December 2011, French Defence Minister Gerard Longuet had warned that the Rafale production line would be halted if none of the jets could be sold abroad.

Eurofighter said it respected India's decision but was disappointed. "Although this is not yet a contract signature and contract negotiations are still ahead, we are disappointed," a statement said.

In April, India pulled a surprise by cutting out the U.S. bidders Boeing and Lockheed Martin, much to Washington's disappointment. Also it dropped Sweden's Saab AB and the Russian makers of the MiG-35 from the race, leaving Dassault and Eurofighter.

The tendered contract is for the outright purchase of the 18 combat aircraft by 2012 with another 108 to be built in India with options to acquire more.