US Defence Secretary Ashton Carter is likely to visit India next month when the two sides are expected to ink the nearly $2.5 billion deal for 22 Apache and 15 Chinook heavy-lift helicopters.
Though the final dates for Carter’s visit have not been announced, defence sources said the visit will take place in May during which the two sides will discuss ways to enhance defence ties, especially in context of Prime Minister Narendra Modi’s “Make in India” initiative.
The Apache and Chinook helicopters deal is likely to be among the pacts that will be inked during the visit, the sources said.
The deal would be presented before the Cabinet Committee on Security for approval soon, the sources added.
American defence major Boeing, along with the US government, has extended the validity of the price quoted by them for another three months hoping to wrap up the deal soon.
The Indian Defence Ministry had last month sought extension of the validity period on its expiry on March 31.
The US firm had in February this year warned of a price hike if India does not finalise the contract soon.
“They (Defence Ministry) kept asking for extensions and we did provide them as and when appropriate. It is not always possible to keep extending because we live in a world where we feel inflationary pressure,” Boeing India President Pratyush Kumar had said in a press conference.
Boeing has extended the price validity for the deal at least twice since cost negotiations concluded in 2013, with the last extension for a period of six months granted in October 2014.
Incidentally, the present Defence Procurement Policy does not allow room for increase in price once a bid has been shortlisted. In the event of the original manufacturer seeking a higher price than the one agreed upon, the tender can be terminated and a fresh one issued, as per defence officials.
The deal for the Apache is a “a hybrid one”, with one contract to be signed with Boeing for the helicopter and the other with the US government for its weapons, radars and electronic warfare suites.
The US has been pushing for this contract as it will further bolster American presence in the burgeoning defence market of India.
American companies have over the last decade bagged defence contracts from India worth around $10 billion, including for aircraft like P-8I, C-130J ‘Super Hercules’ and C-17 Globemaster-III.
Foreign fighter jet makers see a multi-billion dollar opportunity in India’s decision to scale back purchases of high-end aircraft from France, which may free up cash in the world’s largest arms importer to buy a new fleet of mid-range planes.
India would buy 36 French Rafale jets for an estimated $4.3 billion, in effect ending talks on a larger deal for 126 planes that would have sucked up some $20 billion and locked rivals out of the market for a generation.
Sweden’s Saab and US Lockheed Martin are set to re-pitch their Gripen and F-16 planes, eliminated in the Rafale tender, as the kind of lighter, single-engine aircraft that Defence Minister Manohar Parrikar said the air force needed to rebuild its fleet.
Source: Business World