Washington: The Obama administration has cleared a $2.1 billion sale to India of eight Boeing manufactured P-8I maritime patrol aircraft. The deal overtakes an earlier $1 billion Lockheed sale of six C-130J Super Hercules military transport planes to the Indian Air Force to become the largest US arms sale to India to date.
The news would have cheered Boeing, a Chicago-headquartered company, the hometown and political cradle of president Barack Obama. The hurried clearance comes even as the Obama administration conducts a ''review'' of military sales to a number of countries, including India.
Even as it seeks to conduct a ''review'' the Obama adminstration has deemed it fit to bar US company General Electric from operationalising two gas turbine engines it has supplied to the Indian Navy for installation on its latest Shivalik-class frigates. The ban is for an indefinite period, leaving a time-bound, critical Indian Navy programme stranded.
In a 12 March notice to the US Congress the State Department has said that it will license the direct commercial sale having factored in "political, military, economic, human rights and arms control considerations."
The Indian navy is Boeing's first international customer for the P-8, a long-range maritime reconnaissance and anti-submarine warfare aircraft. A derivative of the Boeing's commercial 737 airframe, the P-8I, which is the Indian Navy version, is similar to the P-8A Poseidon being developed for the US Navy.
The aircraft had won out over European and Russian offerings, including EADS Airbus A319 and the Russian Ilyushin-38 platforms.
The aircraft can operate effectively over land or water while performing anti-submarine warfare; search and rescue; maritime interdiction; and long-range intelligence, surveillance, target acquisition and reconnaissance missions, according to company statements.
Under terms agreed upon, Boeing will deliver the first P-8I within 48 months of signing the contract, and the remaining seven by 2015.
Boeing's P-8I contract includes associated support equipment, spares, training and logistical support through June 2019, the State Department said in its notice.
The sale would come under the purview of the Indian ministry of defence ''offset'' conditions. These "offsets" were expected to include engineering service, manufacturing and integrated logistics-support projects totaling $641.3 million.
Lockheed and Boeing, the top two defence contractors to the Pentagon by sales, are also in the race to supply 126 new multi-role fighters to India in a deal potentially worth more than $11 billion. Boeing is in the race with its F/A-18 E/F Super Hornet, while Lockheed is touting its F-16.
The sale can potentially run still be grounded because of a lack of end-user agreements between India and the US. Such agreements, though a routine part of US government-to-government arms sales, still have to receive clearance from New Delhi, which holds reservations over aspects of these agreements.