28 April 2011 Last updated at 15:20 ET

India chooses European fighters over US rivals

India accounts for 9% of global arms imports, according to one study

India has shortlisted two European fighter jets, ruling out two US rivals for a key $11bn (£6.6bn) military contract.

The Indian defence ministry picked the pan-European Eurofighter and France-based Dessault's Rafale ahead of jets made by Boeing and Lockheed Martin.

The US ambassador in India said the US was "deeply disappointed" by the news.

President Barack Obama had personally lobbied on behalf of the US defence contractors, as had European leaders.

"It is confirmed Eurofighter and Rafale have been selected and the remaining four are off," said the Indian defence ministry.

The other two companies to miss out were Sweden's Saab and the Russian makers of the MiG 35.

'Political setback'

The ambassador, Timothy Roemer, said: "We are reviewing the documents received from the government of India and are respectful of the procurement process."

He added that the US "looked forward to continuing to grow and develop our defence partnership with India".

However, some commentators suggested there could be some political fallout from the decision.

"The Americans will be very unhappy and people who have been backing the contract will say India has not sufficiently taken into account the political relationship with the US," said former Indian foreign secretary Kanwal Sibal.

"That is a political setback for relations."

Mr Roemer announced separately that he was resigning from his post for "personal, professional and family considerations".

Big spenders

A report published last month said that India had overtaken China to become the world's largest importer of arms.

The Stockholm International Peace Research Institute said India accounted for 9% of all weapons imports between 2006 and 2010.

With a $32.5bn (£19.5bn) defence budget, India imports more than 70% of its arms.

The $11bn deal for 126 fighter jets is part of plan to spend $50bn over the next five years on modernising its armed forces.