The Hindu : New Delhi News : Major deal for U.S. recce planes in the offing

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Wednesday, Apr 16, 2008
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Major deal for U.S. recce planes in the offing

Sandeep Dikshit

The first new contract is said to be for eight naval planes

This would be the second major setback for Russia which had a near monopoly such planes
For the U.S., the deal will mark a transition in its relationship with India

NEW DELHI: The U.S. is poised to bag another major defence contract from India estimated to be in the region of $1 billion, said highly placed sources.

The first contract is said to be for eight naval reconnaissance planes. India could place an order for 12 more such aircraft, added the sources.

This would be the second major setback for Russia which had a near monopoly in supply of such planes. Earlier, the U.S. breached Russian hold over military transport planes by winning a multi-billion dollar contract for all-weather troop lift aircraft.

Terming it a strategic purchase that did not need global tenders, India awarded the contract to the U.S.-based Lockheed Martin.

This time the contract is being given to the other U.S. civil-military aircraft major Boeing, which is facing competition from a Western European consortium and Russia (now supplying the Indian Navy’s reconnaissance planes). Significantly, both Boeing and Lockheed are in the fray for the Ministry of Defence’s ‘mother of all contracts’— the over $10 billion (about Rs.42,000 crore) tender for 126 multi-role combat aircraft (MRCA).

The MRCA contract has a high off-set content of sourcing 50 per cent of the contract value. The successful company would be able to “bank” the excess offsets which could be drawn upon while fulfilling the domestic indigenisation obligation for the contract.

However, the present policy does not allow the banking of offsets and all eyes are on the decision to be taken by Ministry of Defence’s Director General (Acquisition) S. K. Sharma. He is expected to shortly arbitrate over whether banking of offsets should be for two or 10 years.

In case the banking of offsets is for 10 years, the U.S. companies would be able to transfer any extra offsets from these deals to the MRCA contract.

For the U.S., the deal will mark a transition in its defence equipment relationship with India.

On surface, the maritime reconnaissance planes deal seem to be following the script. However, sources said these planes would be gradually equipped with missiles that could destroy hostile naval assets, including submarines.

The contract will be in keeping with Pentagon’s plan of catering to India’s requirement for non-lethal but sophisticated defence hardware.

So far, the U.S. has supplied equipment such as artillery locating radars, a large amphibious assault ship and the Hercules troop lift planes.

Surveillance aircraft

Boeing’s P8i maritime surveillance aircraft is based on the chassis of its civilian 737 aircraft and would replace the existing fleet of Russian IL-38 aircraft.

As was the case with the contract for upgrade of T-72 tanks, India rejected the option of modernising these aircraft on grounds of excessively high quoted prices.

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