Thursday, February 10, 2011

The biggest-ever Indo-US defence deal expected to be worth USD 4.1 billion for procuring 10 C-17 heavylift transport aircraft has been delayed over price issue.

The deal was earlier scheduled to be cleared by the Cabinet Committee on Security (CCS) in its meeting in March-end but now will be put up for clearance only after the US answers queries on whether India was being charged more price for the aircraft than other countries, Defence Ministry sources said here.

The per unit cost being charged from India by the US for the C-17 is USD 410 million whereas it is sold to Australia at a price of USD 300 million per aircraft.

After certain representations were made to the Ministry that the aircraft were being sold to India at comparatively higher price, the deal was put on hold and it would be come up before the CCS only after the US government answers Indian government's queries, the sources said.

The aircraft is being purchased through Foreign Military Sales (FMS) route by India under which the sale agreement is signed between the two governments.

The defence ministry had already approved funds for procuring the aircraft in the last fiscal, they said.The US Congress had notified the sale of the C-17s to India at USD 5.8 billion representing the highest possible estimate for the deal which includes all potential services offered.

India is planning to procure the aircraft for augmenting its fleet of Ilyushin-76 aircraft and Antonov-32 transport aircraft from the US.

The negotiations between India and the US for the deal were completed in February this year.

After finalising the initial deal for ten aircraft, the Indian Air Force (IAF) is also planning to place orders for additional six aircraft.

Till date, the biggest defence deal between the two sides is for the procurement of eight P-8I maritime surveillance aircraft for the Indian Navy at USD 2.1 billion.

Since 2005, the US companies have bagged defence deals worth around USD four billion and are participating in all the major tenders issued by Indian armed forces for defence purchases.