January 31, 2012 / 7:35 AM / 9 years ago

UPDATE 3-Dassault lowest bidder for India jet deal -sources

* Defence min source: Rafale jet is cheaper, preferred

* India cabinet must sign off on deal

By Manoj Kumar and Nigam Prusty

NEW DELHI, Jan 31 (Reuters) - Dassault Aviation’s Rafale combat jet has undercut the Eurofighter Typhoon, and the company is now in exclusive talks on the multibillion-dollar deal to supply India with 126 planes, government sources said on Tuesday.

“France’s Dassault has emerged as the lowest bidder, and further commercial negotiations will take place with the company before signing a formal deal,” one government source said.

The source said both companies had been informed.

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.

Defence Minister A.K. Antony said earlier on Tuesday that no deal would be signed before the end of March.

“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 had to look at any agreement after him.

A defence ministry source said the life-time cost of the tender including training and maintenance could reach $15 billion, above previous estimates of around $11 billion.

The source said the Rafale was preferred because of lower costs, and the Indian airforce’s familiarity with French warplanes such as the Mirage.

“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,” said the source, who asked not be named.

In 2011, Dassault won a $1.4 billion contract to upgrade India’s Mirage fleet.

In December, France’s defence minister Gerard Longuet warned that Dassault would stop production of the Rafale in 2021 if it did not win any export orders.

A deal in the works since 2008 to sell 60 fighters to the United Arab Emirates hit a new snag last year when Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed called Dassault’s terms “uncompetitive and unworkable”.

The UAE has also sought details of the Typhoon, built by the German and Spanish branches of EADS, Britain’s BAE Systems and Italy’s Finmeccanica. American, Russian and Swedish bids were rejected in April.

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