India has signed a deal to buy 36 Rafale fighter jets from France for around $8.7bn, the country's first major acquisition of combat planes in two decades and a boost for Prime Minister Narendra Modi's plan to rebuild an ageing fleet.

The first ready-to-fly Rafales are expected to arrive by 2019 and India is set to have all 36 within six years.

French Defence Minister Jean-Yves Le Drian signed the agreement with his Indian counterpart, Manohar Parrikar, in New Delhi, on Friday, ending almost 18 months of wrangling over terms between New Delhi and manufacturer Dassault Aviation.

Parrikar said the deal would "significantly improve India's strike and defence capabilities".

Air force officials have warned for years of a major capability gap opening up with China and Pakistan without new state-of-the-art planes, as India's outdated and largely Russian-made fleet retires and production of a locally made plane was delayed.

India had originally awarded Dassault an order for 126 Rafales in 2012 after the twin-engine fourth-generation fighter beat rivals in a decade-long selection process, but subsequent talks collapsed.

Modi, who has vowed to modernise India's armed forces with a $150bn spending spree, personally intervened in April 2015 to agree on the smaller order of 36 and give the air force a near-term boost as he weighed options for a more fundamental overhaul.

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But an industry expert says the deal does not stand to benefit India.

"I don't think it's a good deal," Bharat Karnad, a research professor in national security studies at the Centre for Policy Reseach, told Al Jazeera.

"The original deal was for 126 aircrafts for a sum of $12-15bn. If you look at 36 being bought for $9bn without any transfer of technology, it ends up being a solution to ensure the health of the aviation sector in France.

"The aircrafts are far too few to have a great operation significance in war."

Al Jazeera's Natacha Butler, reporting from Paris, said there was a lot of lobbying that took place behind the scenes to make this deal happen.

"It's a big deal indeed for France and is expected to create up to 5,000 jobs here," she said.

"The 36 planes will be built here before being sent to India ready for service. At many stages, it looked as if it wasn't going to be signed but the French government and President Francois Hollande have been very instrumental and lobbied hard over the years."

'Mark of recognition'

Friday's agreement is a major vote of confidence in the Rafale, which had long struggled to find buyers overseas, despite heavy lobbying efforts by the administration of President Hollande.

Hollande hailed the deal as recognition of France's aviation industry.

"The agreement ... is a mark of the recognition by a major military power of the operational performance, the technical quality and the competitiveness of the French aviation industry," Hollande said in a statement.

India says its locally made Tejas fighter, which took to the skies in July 33 years after it was cleared for development, will form a major part of its future fleet, but Parrikar has also said that India needed 100 new light combat aircraft by 2020 to replace Russian MiG-21s.

India is the world's biggest arms importer, and despite Modi's pledge to build a local manufacturing base, foreign defence firms view India as one of the most lucrative markets as Western states trim defence budgets.

Tensions have flared up between Pakistan and India following the Uri attack last week that killed 17 soldiers in Indian-administered Kashmir.

Pakistan Prime Minister Nawaz Sharif, at his UN General Assembly address on Wednesday, said he did not want an "arms race with India". But Eenam Gambhir, India's UN diplomat called the neighbours "a terrorist state", blaming the neighbouring country of planning the attack in Uri.

Source: Al Jazeera News And Agencies