Biggest Indo-US defence deal; CCS clears buy of 10 C-17s

Marking the biggest defence deal between India and the US, government on Monday gave a green signal to procurement of 10 C-17 heavy-lift military aircraft at a cost of USD 4.1 billion, weeks after America lost out in the bid for 126 fighter deal.

Under the deal, cleared by the Cabinet Committee on Security at a meeting chaired by Prime Minister Manmohan Singh, the planes would be bought through the government-to-government Foreign Military Sales (FMS) route, Defence Ministry officials said.

As per the proposed agreement, the US defence major Boeing, the manufacturer of the aircraft, will have to invest 30% of the contract amount for setting up defence facilities in India, officials said.

The procurement involves offsets clause, under which a vendor bagging a defence deal worth over Rs 300 crore has to reinvest at least 30% of the deal amount in Indian defence, homeland security or civilian aerospace sectors.

Prior to this, the biggest deal with the US was worth USD 2.1 billion for procurement of eight P-8I maritime surveillance and anti-submarine warfare aircraft from Boeing through direct commercial sales in 2009.

Boeing, along with another US company Lockheed Martin, had recently failed to qualify in a bid for procurement of 126 Medium Multi-Role Combat Aircraft (MMRCA) for the IAF, which had upset the Americans.

Washington had, however, then said that strategic ties with India would not be overshadowed by exclusion of the two companies from the Indian fighter contract and the bilateral defence dialogue between the two nations would work on enhancing cooperation in cutting edge technology.