August 29, 2015

U.S., Boeing To Withhold Prices Hike For Apache, Chinook Till September-End

The U.S. government and Boeing are all set to maintain the prices of the Apache attack and the Chinook heavy lift helicopters offered to the Indian Air Force (IAF) by another month till Sept.30, 2015 , "one last time." The present offer was to expire on Aug.31.
This move could pave the way for India to clear the two deals in September and be ready for inking the contracts, negotiations for which have been dragging for three years now, by the end of this year.
This will be the 12th extension of its price offers for the two choppers and the U.S. has indicated that this could be last time the deadline for price hike has been stretched. The deadline extension will be provided, as the Indian government has already indicated that the two contracts worth at least $2.5 billion were at the last stage of clearance, according to government and industry sources. The present prices for 22 Apache AH-64E Apache and 15 Chinook CH-47F were negotiated in September 2013.
"Of course, the U.S. government and Boeing will extend the existing price offers. But, this time, they will provide only a month-long extension of the deadline before they actually revise the price offers for both Apache and Chinook," the sources told Arming India today. Ahead of this development, U.S. Ambassador to India Richard Verma and Major General James McDonald of the U.S. Army Security Assistance Command had separately written this month to the Indian Defense Ministry indicating that the existing price offers could not be held on for more time beyond Aug.31, the Hindustan Times had reported.
The American officials were replied to by Indian Air Force's Assistant Chief Air Vice Marshal Sandeep Singh, requesting 30 more days time, and stating that the entire acquisition process was on the verge of being finalized, the report said.
Defense Minister Manohar Parrikar, it said, was pushing his ministry bureaucrats to take the purchase proposals for the two helicopters to the Cabinet Committee on Security (CCS) next week.
A revision in the prices for the two helicopters, the report said quoting a South Block official, who gave the example of the BAE Systems' M777 Ultra Light Howitzers that got delayed by two years after a price revision in October 2013.
There was a buzz earlier in April and May that India could finalize the two contracts ahead of the visit of U.S. Defense Secretary Ashton Carter to India in June, when the deals could be signed. But the Indian decision-making process clearly took more time than expected.
The Apache, to be armed with the Hellfire missiles, was selected in a competitive tender over the Russian Mi-28 Havoc after extensive flight trials in high-hot extremes in 2012. The tender provides for an option to acquire an additional 11 of these attack helicopters. In addition, the Army Aviation Corps has initiated a program to acquire 39 Apaches.
The iconic attack helicopter is intended to be acquired for the IAF in a unique hybrid deal, wherein the platform, spares and logistical support will be provided under a Direct Commercial Sale (DCS) and the weapons, sensors, engines, and training under Foreign Military Sales (FMS).
Like the Apache, the twin-rotor Chinook also worsted a Russian helicopter, the Mi-26 Halo heavy lift helicopter in trials, also conducted in 2012. The Chinooks are being acquired under the DCS route. The tender provides for an option to purchase another seven beyond the original contract for 15. The Chinooks are expected to provide the required lift to India’s Mountain Strike Corps, which is being raised for a combat role on the disputed boundary with China. These choppers will also be expected to carry artillery guns slung under the belly. While catering for a new role, the Chinooks will also replace the IAF’s ageing Soviet-origin Mi-26 fleet. 


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