NEW DELHI — The United States lost a hard-fought competition to supply a new generation of fighter jets to India, which has listed two European manufacturers as the finalists for an order estimated to be worth $10 billion.
The decision was a blow for President Obama, who had pushed hard for this and other defense deals during his visit to India in November as part of his agenda to deepen and broaden the United States’ relationship with India. The American ambassador to India, Timothy J. Roemer, who separately announced on Thursday that he would resign from his post for personal reasons, said the United States was “deeply disappointed by this news.”
While political and economic relations between India and the United States have been warming for years, American arms makers have struggled to win big contracts here. After decades of frosty relations during the cold war, which pushed India to rely extensively on the Soviet Union for military hardware, many in the Indian defense establishment are still wary of American intentions and United States military aid to Pakistan, India’s main adversary.
The American bid to build the fighters came from Boeing and Lockheed Martin. Boeing had offered its F/A -18 jets, and Lockheed Martin pitched its F-16 planes. But India instead narrowed the list to the Rafale fighter from Dassault and the Eurofighter Typhoon jet made by a consortium of European companies. Russian and Swedish bids were also turned down.
The 126 planes are meant to replace aging Russian jets. A spokesman for the Indian Defense Ministry said the country hoped to make a final decision by the end of March 2012.
Both American companies are also looking to sell other military hardware to India, which unlike much of the Western world has been sharply increasing its defense spending. Some analysts say India could spend $50 billion to $80 billion on equipment in the next five years.
One Indian international affairs analyst, C. Raja Mohan, played down the significance of the American companies’ loss of this deal. He said that the Indian government was buying more from United States contractors than ever before.
“One deal doesn’t make everything,” said Mr. Mohan, a senior fellow at the Center for Policy Research in New Delhi. “There has been a lot of hype about this deal. We are doing things with the U.S. that we never did before.”
But another analyst, Nitin Pai, argued that India’s decision would hurt relations with the United States, at a time when the country needed stronger ties with America to advance its interests in Afghanistan and Pakistan and the United Nations Security Council, on which India is seeking a permanent seat.
“This move will most certainly reduce India’s geopolitical leverage with the U.S. military-industrial complex, at a time when India needs it most,” Mr. Pai wrote on his blog, The Acorn. He added, “Is the United States more likely to be sympathetic to India’s interests after an $11 billion contract — which means much needed jobs for the U.S. economy — is awarded to someone else?”
Dinesh Keskar, president of Boeing’s Indian operation, said that while the company was “obviously disappointed” about not making the cut for the fighter jets, it was “quite excited about the opportunities in India.” He added that the company was seeking a meeting with Indian officials to find out why its planes were not selected.
Boeing said the company and the Indian Air Force were in the final stages of negotiating a contract for C-17 cargo planes that was announced by Mr. Obama and Prime Minister Manmohan Singh in November. And it is hoping to win orders for attack and heavy-lift helicopters.
“We are quite engaged with and will continue our partnership with India,” Mr. Keskar said in a telephone interview.
