NEW DELHI, Sept 22 - Ahead of Prime Minister Narendra Modi’s visit to the US, the Cabinet Committee on Security (CCS) today cleared a nearly USD 2.5 billion dollar deal for 22 Apache attack helicopters and 15 Chinook heavy-lift choppers with American aviation giant Boeing.
“The deal for Apache and Chinook (helicopters) has been cleared,” government sources told PTI. The CCS, chaired by Prime Minister Narendra Modi and attended by Home Minister Rajnath Singh, Finance Minister Arun Jaitley and Defence Minister Manohar Parrikar, met after Cabinet meeting.
Many in the defence sector had expected the deal, valued to be around USD 2.5 billion and pending since 2013 following finalisation of cost negotiations, to be signed during the visit of US Defence Secretary Ashton Carter in June this year.
The deal for Apache is “a hybrid one”, with one contract to be signed with Boeing for the helicopter and the other with the US government for its weapons, radars and electronic warfare suites.
The US has been pushing for this contract as it will further bolster American presence in the burgeoning defence market of India.
Defence sources said that the deal will have an offset obligation of 30 per cent.
Offset policy was first introduced as part of the Defence Procurement Procedure (DPP), 2005, under which a foreign company has to invest back a portion of the deal into India.
American companies have over the last decade bagged defence contracts from India worth around USD 10 billion, including for aircraft like P-8I maritime surveillance planes, C-130J ‘Super Hercules’ and C-17 Globemaster-III in the transport category.
Modi will be undertaking a seven-day trip to Ireland and the US from tomorrow. The Prime Minister, who will commence his US trip from September 24 said, “This visit seeks to build on the substantial ground covered during my last visit to USA and President Obama’s visit to India early this year.”
The helicopter deal had survived over 10 price extensions from the American side with the last one being for a month as desired by India. – PTI