The Indian Air Force (IAF) is set to finalise Airbus Military’s A330 MRTT over Ilyushin IL-78 air-to-air refuelling tanker for the potential INR85bn ($1.56bn) multi-role tanker transport (MRTT) aircraft contract.

An unidentified defence ministry source was quoted by The Times of India as saying the A330 tanker emerged as the lowest bidder on account of lifecycle costs, and the ministry had called EADS for final commercial negotiations regarding the procurement of six aircraft.

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"Four to five years have been lost. IAF could have got the Airbus-330 MRTT much earlier and at a cheaper cost."

"The actual contract will be inked in the 2013-14 financial year since commercial negotiations with EADS will take some time,” the source added.

”Moreover, there has been a massive cut (Rs 10,000 crore) in the defence capital budget for the ongoing fiscal."

The selection follows extensive field evaluation trials conducted by the air force in Gwalior in December 2011 to validate the rival tankers’ ability in refuelling its Su-30MKI, Mirage 2000H and MiG-29 fighter aircraft.

India had also selected the A330 MRTT over the Il-78 tanker in May 2009, but the order was terminated in January 2010, following the finance ministry’s objections to its high operational costs.

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"Four to five years have been lost. IAF could have got the Airbus-330 MRTT much earlier and at a cheaper cost," the source said.

The new tankers are scheduled to augment IAF’s Agra-based IL-78 fleet, which is currently used for refuelling fighters and transport aircraft during flight.

Following its induction into service, the MRTT is also anticipated to increase operating radius of fighter jets when performing out-of-area contingency operations.

A military derivative of Airbus A330-200 airliner, the A330 MRTT is designed to perform air-to-air refuelling without any additional fuel tanks, besides cargo, troop transport and medical evacuation missions.