India clears biggest ever defence deal with US

Jun 06, 2011 12:00 AM

The Indian Government's cabinet committee on security (CCS) cleared a proposal to buy ten Boeing C-17 heavy-lift military aircrafts, worth $ 4.1 bn, from the United States for the Indian Air Force. This dwarfs previous defence deals between the two countries.
''The CCS meeting chaired by Prime Minister Manmohan Singh cleared the proposal for purchase of the planes from the US through the Foreign Military Sales (FMS) route,'' defence ministry officials said.

Reports suggest that after the initial deal for ten aircrafts, the IAF may increase the size of the order by another six.
The C-17 will be the second American transporter in the IAF's inventory. It has now begun to induct the first of the C-130J Super Hercules aircraft manufactured by Boeing rival Lockheed Martin. Unlike the C-17, the C-130J is a medium range transport, though with specialised capabilities.

Under terms of the deal, Boeing, the manufacturer of the aircraft, will invest 30 % of the contract amount for setting up defence facilities in India. This comes under the industrial offset provisions as mandated under the country's defence procurement rules.
Under such procedures, a vendor entering into any defence deal worth over Rs 300 crore has to reinvest at least 30 % of the deal amount in Indian defence, homeland security or civilian aerospace sectors, unless otherwise specified.

Foreign governments and companies are competing to sell $ 120 bn worth of arms and equipment that India is likely to purchase in the period 2012-17, as it overhauls defence capabilities.
The deal for the C-17 Globemaster-III, which amounts to over Rs 18,000 crore, would be the biggest-ever defence contract to be entered into with the United States. Earlier, the Indian Navy had entered into a deal with Boeing for the supply of eight P-8I maritime surveillance and anti-submarine warfare aircraft worth $ 2.1 bn. This was done under the direct commercial sales route in 2009.

To date the Indian Air Force is operating an ageing fleet of Russian Ilyushin-76 and Antonov-32 transport aircrafts.
The four-engine C17 aircraft can lift two T90 tanks and artillery guns or over 130 fully equipped combat troops. The heavy-lift transport will be used for rapid strategic airlift of troops and cargo to operating bases throughout the world. It can also perform tactical airlift, medical evacuation and airdrop missions.

It appears that the aircraft may be equipped with some important communication equipment even though there is no agreement between the two nations on signing the contentious Communications Interoperability and Security Memorandum of Agreement (CISMOA).
Before the navy deal with Boeing for the P-8I, the IAF had signed a billion dollar deal for the C-130J Super Hercules aircraft.

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