Paris, Feb 1 : French President Nicolas Sarkozy today welcomed India's decision to select Dassault as the preferred bidder for a multi-billion-dollar fighter jet contract.

India will be buying 126 French-made combat aircraft in a massive 10.2 billion dollars (Rs. 54, 000 crore approx) deal that will increase the might of the world's fourth largest air force.

Dassault snapped up the deal with the lower bid in a two-way competition against the Eurofighter Typhoon aircraft

The selection of Dassault's Rafale multi-role fighter "goes far beyond the company that makes them, far beyond aerospace -- it is a vote of confidence in the entire French economy," Sarkozy said.

Sarkozy said the competition for the contract was "at a very high level" and that the Rafale was chosen "thanks to the competitiveness of the global cost of the aircraft over its lifetime."

The announcement, the first anticipated sale of Rafales to a foreign buyer, gave a much-needed boost to France's Rafale programme, which had been suffering from a lack of foreign contracts.

The Rafale, in service for the French Air Force since 2006, has been flying air support roles in Afghanistan since 2007, and was a big part of the NATO air campaign in Libya in 2011.

The Rafale is a twin-engined, delta-wing jet. It was first introduced in 2000 and since then is produced both for land-based use with the French Air Force and for carrier-based operations with the French Navy.

The offset clause in the tender, included under the Defence Procurement Procedure (DPP) of 2006, requires the winner of the tender to reinvest 50 percent of the deal amount in the Indian defence industry in an effort to energize it.

Under the terms of purchase, the first 18 aircraft will come in a fly-away condition, with the remaining 108 to be manufactured by Hindustan Aeronautics Limited under a transfer of technology agreement.

The first 18 jets will have to be supplied within 36 months.

The size of the contract could eventually go up to 200 aircraft, as there is a provision for increasing the order by 50 percent without any price hike.

The next step in finalising the contract would involve cost negotiations with Dassault, which will be held in the next 10-15 days.

The other four aircraft in the fray earlier were American firms Lockheed Martin''''s F-16 and Boeing''''s F/A-18, Russian United Aircraft Corporation''''s MiG-35 and Swedish SAAB''''s Gripen.

The Defence Ministry in April 2010 shortlisted Dassault and EADS, rejecting 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 IAF in India and in the country of manufacture.

Dassault has also won a 2.4 billion dollars contract to upgrade the IAF's Mirage-2000 fleet. (ANI)