In a brief announcement on its Web site Dassault said it is "honored and grateful to the Indian government and the people of India to be given the opportunity to extend their long-lasting cooperation."
Dassault Aviation and its partners "reiterate their commitment to meet the operational requirements of the Indian air force and underline their pride in contributing to India's defense for over half a century."
Dassault was the low bidder, edging its main rival EADS with its Eurofighter Typhoon, a report in The Times of India said.
India's decision to opt for Dassault is a further blow to EADS. In late December EADS lost out to Lockheed Martin's fifth-generation fighter F-35 Lightning II in a major Japanese military contract.
Japan chose the F-35 also over Boeing F/A-18 Super Hornet in a deal estimated at around $7 billion for 42 planes.
The Times of India also reported unnamed source saying further negotiations on price will be held between Dassault and the government in the next two weeks.
The announcement ends a five-year search by the Indian government to find a supplier for its next-generation fighters.
The tender, which was issued in August 2007, also was contested by Boeing with its F/A-18E/F Super Hornet, Lockheed Martin's F-16, the Russian-made MiG-35 and the Gripen from Swedish firm Saab.
However, the U.S., Russian and Swedish bids eventually were rejected after technical evaluation and field trials, The Times of India reported last year.
To the request for proposal stated that the bid winner was to supply 18 of the 126 aircraft to the air force within 36 months from the manufacturer's own facilities. Under transfer of technology agreements, the remaining aircraft will be manufactured in India at the Bangalore factories of Hindustan Aeronautics Limited.
HAL is a Navratna company -- a government business -- and has 19 production and overhaul divisions and 10 research and development centers in India, the company's Web site said. It has 33,000 employees of which around half have "more than a decade of aircraft industry experience."
HAL also has also diversified into the manufacture as well as the repair and overhaul of industrial and marine gas turbine engines.
Among HAL's major upgrades have been 63 of the Indian air force's 69 MiG-29 fighter aircraft as part of $900 million deal with Russia's MiG Corp. announced last February. The first six upgrades -- separate from the upgrades to be done by HAL -- were done by MiG in Russia.
In July 2010, BAE Systems won a $700 million contract to supply India with 57 Hawk Advanced Jet Trainers to be built under license by HAL. The British single-engine, tandem-seat Hawk trainer is manufactured in Bangalore.