September 13, 2013

US set to bag $5bn defence deals

Having already bagged Indian defence contracts worth over $8 billion in recent years after muscling out Russia, Israel and France, the US is now headed towards clinching another four major deals worth almost $5 billion.

Defence ministry sources on Thursday said the deals for six more C-130J " Super Hercules" aircraft ($1.2 billion), 22 Apache attack helicopters ($1.4 billion), 145 M-777 ultra-light howitzers ($885 million) and 15 Chinook heavy-lift helicopters (around $1 billion) "are in the final stages" now.

India will convey this to US deputy secretary of defence Ashton B Carter when he arrives here next week. Carter, who will hold talks with defence minister A K Antony, national security advisor Shiv Shankar Menon and defence secretary R K Mathur, is the Obama administration's "point man" for expanding defence trade with India as a cornerstone of the bilateral strategic ties.

"The deals should be inked within this financial year (2013-2014) despite budgetary constraints. The C-130J deal, for instance, is likely to go to the Cabinet Committee on Security in October-November," said a source.

The aircraft and howitzer deals will be direct government-to-government contracts under the US foreign military sales (FMS) programme, which does not involve competition through global tenders.

The attack and heavy-lift helicopter deals, however, were won by aviation major Boeing after its AH-64D Apache Longbow and twin-rotor Chinook helicopters outclassed Russian Mi-28 Havoc and Mi-26 choppers in field trials and commercial evaluation.

But there are "some loose ends" in the deals that need to be tied up first. The defence ministry, for instance, has told Boeing that it should drop its insistence on "limited liability clauses" being included in the agreements.

Similarly, the M-777 contract has been hanging fire since January 2010 due to field evaluation reports being "leaked" and certain other irregularities involving a top Indian Army officer. "There is an inquiry in progress but it should not be a major hurdle," said another source.

Cost escalation is another big factor. Due to the long delay, the US Defence Security Cooperation Agency last month hiked the cost of the M-777 deal from the earlier $ 647 million to $885 million for the 155mm/39-calibre howitzers.

Incidentally, the four deals are also in tune with the government's recent approval to the Rs 90,000 crore plan to raise a new mountain strike corps along with two "independent" infantry brigades and two "independent" armoured brigades (totalling over 80,000 soldiers) over the next seven years to plug operational gaps against China.

While the first six C-130J aircraft acquired by IAF are based at the Hindon airbase, the six new "Super Hercules" will be housed at Panagarh in West Bengal. Panagarh will serve as the headquarters for the new Army mountain corps.

Similarly, the air-mobile M-777 howitzers, with an almost 30-km range, can be swiftly deployed in high-altitude areas in Arunachal Pradesh and Ladakh by helicopters and aircraft to counter China.
Times of India

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