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The Government says BAE Systems still has "plenty of opportunity" to win an Indian contract for dozens of new Typhoon fighter jets.
A French firm has already been awarded preferred bidder status for the contract.
But the Business Minister David Willetts says he's continuing to lobby the Indian government on BAE's behalf.
David Cameron yesterday expressed "disappointment" today over the French bid.
But the Prime Minister insisted a final decision had not been taken, and he would do "everything" to help the defence giant win the business.
Despite unions voicing fears, Mr Cameron also said no job losses were expected as a result of the development.
BAE has been hoping to partly assemble 126 Eurofighter Typhoon jets at Warton and Samlesbury in Lancashire for the Indian air force.
India's government has signalled that French firm Dassault put in a lower bid for its Rafale jets, although no formal statement has been made.
Sources at BAE said it was "far from a done deal" and no contract has been awarded to Dassault.
Will is one of our reporters in the UK, specialising in business and technology stories.
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