The deal had been in the works for some time, and was being signed in the presence of French President Jacques Chirac and Prime Minister Manmohan Singh, who met in Delhi on Monday, said the chief executive of Airbus, Noel Forgeard.
Under the deal, Indian will purchase A320 and A319 airplanes. At catalogue prices, that totals $2.5 billion, he said.
The state-owned domestic carrier — which changed its name to simply "Indian" in December from Indian Airlines — flies mainly domestic routes.
The airline is struggling to fend off challenges to its market share by low-cost newcomers to India's airline industry.
In recent years, the company has slipped to second place behind Jet Airways, and low-cost airlines like Air Deccan, Spice Jet and Kingfisher Airlines have also presented a threat.
India's aviation sector has witnessed an average growth rate of between 25-30 percent in recent years, fueled by an expanding economy and the rising income of India's estimated 300 million strong middle class.
In the financial year ended March 31, 2005, Indian passengers on domestic and international routes made a total of 59.54 million trips, up 22 percent on the previous year.
Chirac, who arrived in India on Sunday for a two-day visit, and Singh signed an agreement Monday on future civilian nuclear cooperation. While details were not immediately available, Singh told reporters the nuclear agreement was inked along with understandings in defense, tourism and other areas.
Airbus and Boeing are engaged in a heated battle for orders in Asia, a region they have both said has tremendous growth potential.
In 2005, Toulouse, France-based Airbus said it had received a record 1,055 net orders, beating Boeing Co.'s 1,002. It was the fifth straight year that Airbus outpaced Boeing in net orders, but the European plane maker fell behind its rival in order value as sales of its larger planes failed to keep pace.
In terms of deliveries, Airbus said it had 378 last year to Boeing's 290.
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