The aircraft being chosen right now is for the Light Multi-role Fighter. I see this as the first lot of many more hundreds to come. Just like the Mig-21 was in the 60's of which IAF ended up operating over 800!
If this project actually comes to fruition and F-16 is chosen there may, may not be export customers. Same for Gripen E. Whatever, if no export customers emerge, we will never know if the rejected aircraft would have found export customers.
My money is on Gripen E coming through, though. I think SAAB is prepared to offer much more to India than LM.
The problem is that Gripen E also doesn't have much of an export market as well.
It's going to get eaten alive in the world market by the F-35 and PAK-FA on the high end, and the middle of the class already has aircraft like the Rafale and the various Sukhoi Flanker variants making up the middle of the market, and the low end of the market is dominated by used fighters and high end trainers.
The customer base just isn't there for many sales of the Gripen E. The American content of the aircraft pretty much makes this a primarily Western-aligned fighter, and the nations that have the money and access are buying into the F-35. If they have money, but don't have immediate access to F-35, they are mainly buying Rafales, Eurofighters, F-15E's, F/A-18 E/F's, and F-16's. If they don't have the money, they are buying used aircraft and having them refurbished.
And the worst thing of all is that Gripen E is coming onto the market at a time where the majority of the customers that can afford brand new fighters have already made up their minds about their next fighter choice, and the low end of the market is in the process of being flooded by used fighters meaning that less wealthy nations can pickup a decent fighter with plenty of service life left in them on the cheap, and have them upgraded and refurbished on the cheap.
For example, the Israeli's a few months ago placed just under 100 older F-16's on the market, and the USAF also has over 500 older model F-16's sitting in storage that they are selling. So, if you are a lower end user, why pay $100 million for a brand new Gripen E, when I can buy 5 modernized and refurbished F-16's?