India on Friday signed an 8.7-billion-dollar deal to buy 36 fighter jets from France in what is among the world's major defence acquisitions.

The agreement for the purchase of the Rafale jets built by French company Dassault was signed by Defence Minister Manohar Parrikar and his French counterpart, Jean-Yves Le Drian in New Delhi.

"The agreement signed today marks the recognition by a great military and strategic power of the operation performance, technological quality and competitiveness of the French aeronautic industry," French President Francois Hollande said in a statement.

"Rafale will significantly improve India's strike and defence capabilities," Parrikar said on Twitter.

Indian defence ministry officials said the purchase of the jets in a "ready-to-fly" condition will cost 580 billion rupees (8.7 billion dollars).

The Rafales come equipped with a state-of the art weapons package that includes the Meteor missiles, considered among the most advanced in the world, they said.

The deliveries of the plane would begin by 2019 and the entire order completed in approximately five and a half years, French and Indian media reported.

Friday's deal marks an end to India's long search for new planes as the country modernizes its armed forces to keep up with neighbouring rivals Pakistan and China.

It is also India's first major acquisition of fighter jets in 20 years, after Delhi signed a deal with Russia for the Sukhoi Su-30 MKI fighters in 1996.

India's number of fighter squadrons has fallen to 32 from the sanctioned 42 and the deal is considered crucial for the Indian air force to counter its depleting strength.

The Rafale deal was clinched following tortuous negotiations between India and France after what started as a much bigger order.

In 2012, Dassault won an Indian contract for 126 Rafale fighters, then estimated at around 10 billion dollars.

But negotiations on cost and assembly of the planes followed and three years later both sides scaled down the original plan, with New Delhi agreeing to buy 36 Rafale jets in a ready-to-fly condition.

A twin-jet fighter aircraft, the Rafale can carry out all combat aviation missions: air defence, interception, ground support, in-depth strikes, reconnaissance, anti-ship strikes and nuclear deterrence.

Last year, Egypt and Qatar each ordered 24 Rafales. In a statement, Dassault, said the contract illustrated the "strategic relationship and exemplary partnership" between India and France.

"The Rafale has been used by the French armed forces in combat operations for more than a decade now and has proven its operational excellence in various theatres around the world," it said.

India was ranked as the world's leading arms importer by the global security think tank Stockholm International Peace Research Institute (SIPRI) in February. It's imports between 2011 and 2015 stood at 14 per cent of the world's total, with Russia being its main supplier.

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