New Delhi: The Cabinet Committee on Security (CCS) on Monday cleared a proposal to buy from the US ten C-17 heavy lift military aircraft worth $4.1 billion, the biggest-ever defence deal to be entered 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.
Under the deal, the US defence major Boeing, the manufacturer of the aircraft, will have to invest 30% of the contract amount for setting up defence facilities in India, they said.
As per the procurement procedure, offsets clause entails that a vendor winning a defence deal worth over Rs300 crore has to reinvest at least 30% of the deal amount in Indian defence, homeland security or civilian aerospace sectors.
The deal, which amounts to over Rs18,000 crore, would be the biggest-ever defence contract to be entered with the US.
Prior to this, the biggest deal with the US was worth $2.1 billion for procurement of eight P-8I maritime surveillance and anti-submarine warfare aircraft from Boeing through direct commercial sales in 2009.
Boeing, along with another US company Lockheed Martin, had recently failed to qualify in a bid for procurement of 126 Medium Multi-Role Combat Aircraft (MMRCA) for the IAF, which had upset the Americans. The MMRCAs are likely to cost India over $11 billion.
Washington had, however, then said that strategic ties with India would not be overshadowed by exclusion of the two American companies from the Indian fighter contract and the bilateral defence dialogue between the two nations would work on enhancing cooperation in cutting edge technology.
India is planning to procure the aircraft for augmenting its fleet, which now comprises Russian-made transport aircraft Ilyushin-76 and Antonov-32.
After finalizing the initial deal for 10 aircraft, the IAF is also planning to place orders for additional six C-17s.
The C-17 will be the second American airlifter in the IAF transport fleet, which recently inducted the C-130 J Super Hercules.
The four-engine C-17 aircraft can lift two T-90 tanks and artillery guns and are used for rapid strategic airlift of troops and cargo to operating bases throughout the world. It can also perform tactical airlift, medical evacuation and airdrop missions.
The aircraft has the capacity to carry over 130 fully- equipped combat ready troops.
However, the aircraft would come with some important communication equipment in absence of the contentious Communications Interoperability and Security Memorandum of Agreement (CISMOA) with the US.
In the recent past, India had finalized defence deals worth over $8 billion, including the C-130J, C-17, P-8I and Harpoon anti-ship missiles. Several more multi-billion dollar deals are in the pipeline for being cleared in the near future.