When India did not shortlist either of the U.S. fighter offerings in its large Medium Multi-Role Combat Aircraft competition, it raised questions whether something was amiss with the defense-industrial relationship between the two sides.

But U.S. industry still looks to have access to this growth market. The latest sign is that after seven months of on-again, off-again talks, India’s effort to re-engine more than 100 of its Sepecat Jaguar strike aircraft is finally moving forward, with indications that Honeywell will land the deal.

Indian air force officials say the defense minister, in late August, was told to fast-track the acquisition to replace the Jaguar’s Adour Mk811 engines in light of operational considerations and requirements. That effectively means a contract will be awarded to Honeywell for its F125N engine. Both U.S. President Barack Obama and Secretary of State Hillary Clinton pushed for the $650 million deal during their visits to New Delhi last year. U.S. officials suggest that the paperwork for a foreign military sale (FMS) is already being processed. Any deal with Honeywell would involve the purchase of more than 200 engines.

But it is not a done deal. High-level Rolls-Royce officials says they are still in talks with the air force to upgrade the current powerplant. Rolls-Royce did not respond to the service’s request for proposals earlier this year and was believed to have stepped away from the competition in February, saying it had issues with the stated requirement. While Honeywell offered a new engine, Rolls-Royce’s was an upgrade of the existing Adour engine to the Mk821 standard, and therefore not strictly a “re-engining” as demanded by the Indian air force.

“We are still in dialogue with the Indian air force about what we believe is a much more cost-effective and lower-risk engine upgrade program. A package that would minimize aircraft integration and would utilize existing Adour infrastructure in Hindustan Aeronautics Ltd., which we believe should be a point of deep importance for the customer,” a senior Rolls-Royce India official says. Military officials confirmed that the firm has held several meetings with the acquisition team since February.

In briefings, Honeywell has criticized Rolls-Royce’s Mk821 program, suggesting that several parts of the engine were yet to be developed fully. Honeywell says its offering, the F125IN, is designed to “drop-fit into existing Jaguar airframes, resulting in an enhanced aircraft with superior mission capabilities and with a projected life-cycle savings of over $1.5 billion.”

Privately, Rolls-Royce has questioned Honeywell’s “drop-fit” claim, suggesting that certifying the F125N on the Jaguar is likely to take an unacceptable length of time from the military’s perspective.

The Indian air force, which began acquiring Jaguars in 1981, has since bought license-built variants from Hindustan Aeronautics Ltd., and has had them upgraded several times with new navigational aids, weapons capabilities and precision-attack systems, incrementally cranking up platform weight. After several complaints of low thrust across the aircraft’s operational envelope, particularly at medium altitude, the service decided four years ago to search for a new engine. In 2008, an internal study of the options available recommended an engine replacement rather than an upgrade.

Over the next few months, the Indian air force will also come closer to choosing a close-combat air-to-air missile for its Jaguars. The competitive field has been narrowed to MBDA’s Advanced Short-range air-to-air missile and Rafael’s Python 5. Live-fire field evaluations are scheduled to be held before year’s end.

Indian air force chief Air Chief Marshal Norman Browne, a veteran Jaguar pilot himself, has stressed the need for efficient contracting, faced as he is with depleting squadron strength. Four days into office, a fatal Jaguar crash, still under investigation, is understood to have compelled fresh dialogue with the defense ministry to speed up modernization efforts, since they have a bearing on flight safety.