updated 1/11/2006 8:24:02 AM ET 2006-01-11T13:24:02

State-run Air India on Wednesday signed an agreement with U.S.-based Boeing Co. for the purchase of 68 planes in what officials called the largest single deal in India's civil aviation history.

The deal, finalized after months of negotiations, was valued at $11.8 billion at list prices, but usually large orders get substantial discounts. No final price was made available.

The agreement was signed by Allen Mulally, executive vice president of the Chicago-based Boeing Co., and V. Thulsidas, the Air India chairman, who called it the largest ever for the nation's civil aviation.

Air India's order consists of 27 787s, 15 777-300ERs and eight 777-200LRs. Air India also plans to buy 18 additional aircraft for Air India Express, its low-cost airline.

The delivery of the aircraft is scheduled to begin in November, an Air India statement said.

Thulsidas said the 787 Dreamliners, a new fuel-efficient long-range aircraft, would be flying nonstop on New Delhi-New York and Bombay-San Francisco routes.

Civil Aviation Minister Praful Patel said that with the new planes, the airline also would be flying direct routes from Bangalore, Madras and Hyderabad to Europe and the United States.

Boeing also intends to invest $100 million to set up a new maintenance facility in India, Patel said.

"China and India will drive the growth in this sector in coming years," he told reporters.

Mulally said Boeing's commitment to the Indian aviation industry dates back to more than 60 years. "Air India is a valued and longtime partner," he said.

Air India, which currently has a fleet of 42 aircraft, is replacing its aging planes in hopes of competing better with private carriers.

India's aviation sector is rapidly expanding, with new private airlines taking to the skies and the government moving toward privatization to improve airport infrastructure.

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