Airbus selected as preferred bidder for aerial refueling tankers to India

PARIS Mon Jan 7, 2013 10:43pm IST

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PARIS (Reuters) - Europe's Airbus EAD.PA said on Monday it had beaten Russian competition to be selected as the preferred bidder to supply six A330 aerial refueling tankers to India.

The award paves the way for exclusive talks between Airbus Military and the Indian government for a deal reportedly valued at around $1.25 billion.

Airbus had won a previous Indian competition that was cancelled in 2010 because of Indian government concerns over the tender's structure and the sales price.

The Airbus A330 MRTT tanker, based on A330 passenger planes, competed for the deal against Russia's Ilyushin Il-78 air-to-air tanker, similar to ones already used by the Indian air force.

"Detailed negotiations will now begin, which it is expected will lead to the award of a final production contract for an envisaged six aircraft in 2013," Airbus Military said in a statement.

However, defence experts say the Indian procurement process can often take longer than this and is subject to surprises.

The Times of India, which first reported the deal, quoted an unnamed source last week as saying India could have bought the Airbus tankers at a lower cost but had lost four or five years due to procurement delays.

The award is a setback for Russia in the lucrative Indian defence market, once a mainstay of Soviet exports, the newspaper reported.

India is the fifth nation to select the Airbus tanker, which also competes on world markets with Boeing (BA.N) 767 tankers.

Britain, Australia, Saudi Arabia and the UAE have also committed to the Airbus A330, but rival Boeing last year won a $35 billion U.S. tanker order - by far the biggest - after a bitter and protracted contest.

(Reporting by Tim Hepher, Cyril Altmeyer; Editing by Christian Plumb)

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