India has backed a French firm in a fighter-jet deal worth $10bn, in a move that has left Britain red-faced and sparked concerns for thousands of workers in the country's defence industry.
A consortium which includes BAE Systems was hoping to win the lucrative order to build Eurofighter Typhoon jets, but India has now begun exclusive negotiations with French firm Dassault, after they reportedly offered a lower bid for its Rafale jets. Shares in the French company have now rocketed by 20%.
It was an embarrassing blow for British industry, especially as David Cameron had specifically targeted India as one of the countries he wanted to increase trade with upon becoming Prime Minister.
There has been a four year bidding process for the £6.3 bn contract, which ministers said could support up to 5,000 jobs and 200 local companies.
Unite National Officer Ian Waddell told Press Association: "We are concerned about the serious implications this decision may have and want urgent talks with the company about future plans for the workforce.
The UK defence giant anticipated partly assembling 126 Eurofighter Typhoon jets at Warton and Samlesbury in Lancashire.
Sources at BAE said it was "far from a done deal" and that no contract has been awarded to Dassault. However Olivier Dassault , Chairman of the Board of Dassault Communications emphatic told the that it “this is very, very, very good news”
A company spokesman said: "BAE Systems notes that Eurofighter Typhoon has not been assessed as the lowest-priced compliant bidder by the Indian ministry of defence at this stage of the tendering process for supply of its new medium multi-role combat aircraft.
"Our partner, Cassidian, submitted an attractive and competitive proposal to supply Eurofighter Typhoon, the world's most modern medium multi-role combat aircraft available today.
"We believe Eurofighter Typhoon offers the best military, industrial and economic solution for India.
"We will continue to support the Indian customer and its evaluation process and work with our European partner companies and their respective governments to seek to understand the basis of the announcement."
However French parties are already celebrating India's indications to do business, despite the contract not being officially signed until March. President Nicolas Sarkozy commented on the fighter jet deal.
"France, its aeronautics, and its industry won a considerable challenge, as our jet fighters won the competition in one of the countries where the competition is the toughest, the fiercest, the most difficult.
This proves, and I hope all French people will understand it, that when we have a good product and that we have the will to support it, we can win on incredibly competitive markets."
Unite warned that the selection of a French fighter aircraft for the multibillion-pound contract could have serious implications for BAE Systems and the UK aerospace industry.
National officer Ian Waddell said: "We are seeking confirmation from BAE Systems that Rafale has been selected as their preferred fighter by India.
"The Typhoon is a superb aircraft which supports thousands of highly skilled jobs in the UK, both at BAE Systems and in the supply chain.
"There are other export orders to be won and it is critical that the company maintains its commitment to Typhoon despite this setback."
The CSEU, an umbrella body for manufacturing unions, is meeting the MoD's Procurement Minister, Peter Luff, next week and the unions will raise this issue as a priority.
Unite said it will continue to concentrate its efforts to deal with the 3,000 potential redundancies at BAE Systems at Brough, Samlesbury and Warton which were announced late last year.