Bangalore: American plane makerBoeing Co. will buy aerospace structures and aviation electronics products worth at least $600 million, or Rs2,941 crore, from seven firms in India as part of the so-called offsets against winning a $2.1 billion contract early in January to supply eight P-8I reconnaissance planes to the Indian Navy.
According to two persons familiar with the development, the offset contracts are being placed with Larsen and Toubro Ltd (L&T), Bharat Electronics Ltd (BEL), Wipro Ltd, HCL Technologies Ltd , Hindustan Aeronautics Ltd (HAL), Dynamatic Technologies Ltd and Macmet Technologies Ltd, a unit of Canada’s aerospace simulator maker CAE Inc. They did not share details about the contract division.
On 9 January, Boeing said the first of the P-8I, a variant of the P-8A Poseidon, the long-range marine patrol and anti-submarine warfare aircraft, will be delivered to the Indian Navy, its first non-US customer, by 2011. The remaining will be delivered by 2015.
Done deal? Employees at Boeing’s plant in Everett, US. The deal is part of offsets against winning a $2.1 billion contract early in January. Ron Wurzer / Bloomberg
“Our team is working on the offset strategy and will be in touch with industry partners in a while,” said Swati Rangachari, a spokeswoman for Boeing in India. “We will concentrate in the areas of avionics (aviation electronics) and aerostructures.”
Wipro, HCL, L&T and HAL declined to comment.
Ravish Malhotra, chief operating officer at Dynamatics, confirmed that the firm had been chosen as a vendor.
A BEL executive said the firm had entered into an agreement with Boeing on the offsets contracts, but a contract was yet to be signed. “The scope of work includes supply of communication equipment, radars, electronic warfare systems and contract manufacturing,” said I. V. Sarma, director for research and development at BEL.
Boeing’s is so far the largest offset commitment for an Indian defence deal since the government mandated foreign arms makers to source at least 30% of the value of the contract of more than Rs300 crore from local firms.
On 1 December, Astra Microwave Products Ltd, a Hyderabad based-firm building microwave wireless technologies, said it won a Rs57 crore offset contract from Israel’s ELTA Systems Ltd, against supply of microwave wireless sub systems for India’s defence radar programme. L&T is the other firm to win part of the Rs243 crore deal from ELTA.
India’s imports of military hardware and software could reach a cumulative $30 billion by 2012, according to a study by industry lobby Associated Chambers of Commerce and Industry of India or Assocham. In the same period, Assocham said, Indian companies are expected to get offset orders from global military equipment makers of nearly Rs49,000 crore, or $10 billion.
The biggest of such orders will come from local sourcing in a purchase of 126 fighter aircraft, estimated to cost Rs42,000 crore. “The focus (to source locally) for foreign vendors, at least in the short term, would be in avionics and software, in which India is strong, and also in structural components,” said Ratan Shrivastava, director for aerospace and defence at the New Delhi offices of research firm Frost and Sullivan.