July 9, 2015

Boeing gives India 3 more months to seal defence chopper deal

US aviation major Boeing Company has accepted India’s request to maintain its quotation price for Apache and Chinook helicopters at $2.5 billion (Rs 15,000 crore) for another three months. The price quoted by the American major had expired on June 30, 2015.
Sources told FE: “A decision is expected soon, hence, the company was requested to extend the price deadline for at least three months. So far, the price deadline has been extended at least 10 times since 2013 for 22 Apache AH-64E Apache and 15 Chinook CH-47F.”
Boeing had extended the validity of the price quoted by them for another three months in April hoping to wrap up the deal soon. The MoD had in March sought extension of the validity period on its expiry on March 31.
In April, the company had extended the price deadline and indicated to the government that this would be the last time. However, so far no decision has been taken by the ministry of finance where the files were sent by the MoD for approval. The files once approved by the ministry of finance are then sent to Cabinet Committee on Security (CCS) for final approval.
Both Apache and Chinooks were selected in a competitive bid over the Russian Mi-28N Night Hunter and the Mi-26 Halo heavy lift helicopter, in 2012.
In February, the company had made it clear it cannot wait indefinitely for the government to sign a deal for Apache attack helicopters and Chinook heavy lift choppers. Again, during US defence secretary Ashton Carter’s visit in June, there were indication that the deal could be finalised, however, there are still no clear indicators of when that will happen.
India operates a Russian-built fleet of ageing Mi-35 attack helicopters that urgently need to be replaced by more modern helicopters with better sensors and missiles. The Apache is considered the world’s premier anti-tank attack helicopter. In its flight evaluation trials, the Indian Air Force had picked the Apache over of the Russian Mi-28N Night Hunter. Similarly, the IAF had concluded that the Chinook heavy lift chopper had lower life-cycle costs than the Russian Mi-26 helicopter and was, therefore, the lowest bidder in the competition.
Sources also indicated that the file relating to the offset conditions for the contract was cleared by the MoD recently and now the deal will come up for discussion in the Cabinet Committee on Security.
The US had been pushing for this contract as it will further bolster American presence in the burgeoning defence market of India.
The American companies have over the last decade bagged defence contracts from India worth around $ 10 billion, including for aircraft like P-8I, C-130J ‘Super Hercules’ and C-17 Globemaster-III.


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