Delhi clears biggest ever $4.1bn defence deal with US
06 Jun 2011
New Delhi: The Indian Government's cabinet committee on security (CCS) cleared a proposal Monday to buy ten Boeing C-17 heavy-lift military aircraft, worth $4.1 billion, 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 here.
Reports suggest that after the initial deal for 10 aircraft, 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 per cent 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 Rs300 crore has to reinvest at least 30 per cent of the deal amount in Indian defence, homeland security or civilian aerospace sectors, unless otherwise specified.
