India close to $1.65-bin military aircraft deal with Japan

28 January 2014

India is close to buying Japanese-made military aircraft in a $1.65-billion deal, becoming the first country since World War II to buy a military aircraft from Japan, helping the country wriggle out of a self-imposed ban of the sale of weapons.

India close to $1.65-bin military aircraft deal with JapanPrime minister Shinzo Abe is also looking at weapons exports to end Japan's export drought by giving his country's defence contractors an entry into foreign markets.

For India, the world's biggest arms importer, which is mainly dependant on Russia, the US and Israel to a certain extent for arms supplies, the deal with Japan lays the ground for a broader cooperation in arms production and technology.

The two countries are reported to have reached a broad agreement on a deal for the amphibious US-2i search and rescue aircraft manufactured by ShinMaywa Industries.

New Delhi is likely to buy at least 15 of the planes, which are priced at about $110 million each, which would take the deal to as much as $1.65 billion, official sources said.

The final details of the deal are yet to be worked out as negotiations will resume in March on joint production of the plane in India and other issues like technology transfer.

"It's a strategic imperative for both sides, and it has been cleared at the highest levels of the two governments," report quoting military sources said.

However, Japan is currently offering a stripped-down civilian version of the US-2i search and rescue plane, to get around Japan's self-imposed ban on arms exports. The version will not have the 'friend or foe' identification system, sources said.

The plane has a range of over 4,500 km (2,800 miles), which will give it reach across Southeast Asia from its proposed Andaman and Nicobar base.

The two governments have set up a joint working group that will meet in March to consider plans to either set up a plant in India to assemble it under licence by an Indian state manufacturer.

The plan is to deliver two aircraft and then assemble the rest of the planes with an Indian partner, military source say.

The deal lays the ground for a broader Japanese thrust into India, the world's biggest arms market dominated for long by Russia but also now buying hardware from Israel and the United States.

"There is a whole amount of defence-related cooperation, between India and Japan," said Gautam Bambawalle, an Indian foreign ministry official responsible for North Asia.

"We want Japanese technology, we want Japanese capital investment into India."

Indian Navy is also interested in Japanese patrol vessels and electronic warfare equipment as Tokyo moves further along in easing its ban on military exports, the Indian officials said.

Abe discussed the aircraft deal with Singh during a trip to New Delhi last weekend as ties rapidly warm between the two nations at a time when both are embroiled in territorial disputes with China.

"Our Joint Working Group on US-2 amphibian aircraft has met to explore the modalities of cooperation on its use and co-production in India. More broadly, we are working towards increasing our cooperation in the area of advanced technologies," Singh said.

The Japanese government under Abe is seeking a more assertive military and national security posture for Japan, breaking out of its post-war constitution that renounces war and maintenance of armed forces.

The Abe government has vowed to review Japan's ban on weapons exports, a move that could reinvigorate struggling defence contractors like Mitsubishi Heavy Industries Ltd and Kawasaki Heavy Industries Ltd.

Mitsubishi is in advanced talks to supply parts for the F-35 stealth fighter to Britain's BAE Systems.

India, which bought defence hardware worth $12.7 billion during 2007-2011, has been trying to build up a domestic manufacturing base for military equipment through indigenous production and technology transfer or through joint production as a condition for placing orders.

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