India okays biggest deal with US for C-17s at $4.1 bn

**Sumku** · 06 Jun 11,, 19:28

NEW DELHI: 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 $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 per cent 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 per cent 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.

.....THis is good news at last.

**Sumku** · 06 Jun 11,, 19:31

Mega defence deals still in US kitty

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NEW DELHI: The US may be "deeply disappointed" by the ejection of its fighters from the $10.4 billion race to supply 126 medium multi-role combat aircraft to India, but it cannot shy away from the fact that it continues to gleefully corner a major chunk of the lucrative Indian defence market.

Despite being a late-comer, the US has already bagged some big-ticket deals, eating into the share of traditional military suppliers to India like Russia, Israel, France and UK.

Moreover, it knows India will spend over $100 billion to acquire military hardware and software in the coming decade, double of what it spent in the last one. From attack helicopters and heavy-lift aircraft to 155mm howitzers and submarines, India will continue to import heavily from abroad in the absence of a strong domestic defence-industrial base.

Outgoing US ambassador Timothy J Roemer, for instance, expressed confidence that the biggest Indo-US defence deal in the pipeline as of now, the $4.1-billion one for 10 C-17 Globemaster-III giant strategic airlift aircraft, will see a quick closure. "Once this over $4 billion sale is finalized, the economic impact will be felt by 30,000 American workers and 650 American suppliers located in 44 states,"

"But do not take my word for it. Let me quote Boeing military aircraft president Chris Chadwick, who said, 'Our hands are pretty full. There's lots going on.' I think the same sentiment can be said by almost all of our defence contractors when it comes to business in India," he added.

That is certainly true. Just in the arena of transport and reconnaissance aircraft, Washington has notched up sales worth over a staggering $8 billion if deals on the verge of getting finalised are also taken into account.

This includes the one for 10 C-17s, which India wants to acquire for swift power projection capabilities, capable as the rugged planes are of carrying a payload of 164,900 pounds after taking off even from makeshift airstrips.

As earlier reported by TOI, this deal is likely to get even bigger, with IAF chief Air Chief Marshal P V Naik holding that another six C-17s may be ordered after evaluating the performance of the first 10.

Similar "follow-on contracts" are on the cards for the six C-130J 'Super Hercules' heavy-lift aircraft ordered for $962 million in 2007 and the eight P-8I Poseidon maritime patrol aircraft ordered for $2.1 billion in 2009. The acquisition for four more P-8Is for almost $1 billion, for instance, has already been cleared by the Defence Acquisitions Council chaired by defence minister A K Antony.

The US, of course, has bagged arms deals in other areas as well, like the $822 million one for 99 GE F-414 engines for the Mark-II version of the indigenous Tejas Light Combat Aircraft and the $170 million for Harpoon Block-II anti-ship missiles. Another almost-done deal is the $647 million one for 145 M-777 ultra-light howitzers.

Despite loosing out on MMRCA, US-India defence deals are set to cross about $10Billion

**commander** · 06 Jun 11,, 20:08

Is it true that we are gonna spend nearly $100 bn

**Blademaster** · 06 Jun 11,, 20:48

I hope that most of the 100 billions are spent on more training ranges, upgrading and expanding the artillery forces, and installing C4IS&S or whatever the latest version they have now and boosting the BMD capability of India. Also we need more helicopters.

**n21** · 07 Jun 11,, 10:10

The number will go up to 16

So 16 C-17, 12 C-130J, (10-15?)IL76's,upgraded An-32 and forth coming Indo-Russian MTA!

Quite a bit of airlift capability!

**n21** · 07 Jun 11,, 10:14

Blademaster,

In terms of helicopters, at-least 200 LCH attack choppers are planned to be inducted. Add to this additional 22 heavy attack choppers(most probably Apaches) are in evaluation. Overall India will be inducting around 1000 choppers in the coming future.

**Doktor** · 07 Jun 11,, 10:39

$4.1bn for 10 planes? Are they plated with gold?

Seriously, $410mn each seems a bit overpaid to me. Anyone care to enlight me?

**Chunder** · 07 Jun 11,, 11:21

Originally Posted by Doktor

$4.1bn for 10 planes? Are they plated with gold?

Seriously, $410mn each seems a bit overpaid to me. Anyone care to enlight me?

Depends what is in the sale package. Could be more than just the aircraft itself.

$100 billion for a country like India isn't that much in hardwear. Aust is spending 16 bn on 100 F-35's...

Dealing with the U.S is probably one of the better opportunities India has this century. If it plays it's cards right....

**Doktor** · 07 Jun 11,, 11:34

Originally Posted by Chunder

Depends what is in the sale package. Could be more than just the aircraft itself.

$100 billion for a country like India isn't that much in hardwear. Aust is spending 16 bn on 100 F-35's...

Dealing with the U.S is probably one of the better opportunities India has this century. If it plays it's cards right....

My point exactly. I know there is more then just the metal and the electronics, but still... Aus pays 160mn/piece of the an advanced fighter, India pays 410mn/piece for a transporter. Too many games behind I have a headache lol

**Sumku** · 07 Jun 11,, 14:03

Doktor,
Looking at how the Govt of India operates, I wouldn't be surprised if an additional 2-2.5 Billions is billed to IAF for the blackmoney, Boeing gave to Congress Govt.

In July 2006 a fixed price contract was awarded to Boeing to deliver four C-17s for US$780m (AUD$1bn).[59] Australia also signed a US$80.7M contract to join the global 'virtual fleet' C-17 sustainment program[60] and the RAAF's C-17s will receive the same upgrades as the USAF's fleet.[61]

Mind you, India in absence of CISMOA wont be getting the full package as applicable to RAAF or USAF

On 6 February 2009, Boeing was awarded a contract for 15 additional aircraft for US$2.95 billion, thus increasing C-17s on contract to the USAF to 205.

Again, due to lack of CISMOA, the one's contracted by India wont have all the features available to USAF.

Even though I Like the C-17, but this needs to be cancelled, or this will plague the entire defense modernization programme as had happened after Bofors Scandal either this or someone needs to shed more light as to the clearly exorbitant price.

**Sumku** · 07 Jun 11,, 14:04

Oh....forgot the Link

**Sumku** · 07 Jun 11,, 14:08

Also in light of below, its pertinent to note that while the USAF contracted for 15 of these in 2009, inflation surely couldn't have pushed the price that high in 2 years.

On 6 February 2009, Boeing was awarded a contract for 15 additional aircraft for US$2.95 billion, thus increasing C-17s on contract to the USAF to 205

**Doktor** · 07 Jun 11,, 14:33

You still haven't signed CISMOA?

I think I have read it somewhere USA urges you to sign it.

Also I think last year IAF commander said "no CISMOA, no problem"

Now you overpay the planes and it seems like a problem

**Sumku** · 07 Jun 11,, 15:05

Originally Posted by Doktor

You still haven't signed CISMOA?

I think I have read it somewhere USA urges you to sign it.

Also I think last year IAF commander said "no CISMOA, no problem"

Now you overpay the planes and it seems like a problem

Oh No. Not yet.
As a matter of fact the outgoing Air Chief Marshal was the first one to speak against CISMOA. As a matter of fact, we are very willing to sign it, but not in present format.
India had nothing going against CISMOA, just the terms are little inconvenient for us to agree, however again its just a matter of time.

Nothing much should be read into it. We all know that US will NOT Change the terms of CISMOA. Timing is just not right for India to sign it just yet. Some point of time in future...maybe

Coming back to the topic, signing or not signing has nothing to do with price.....something else. Could be corruption, but I might be wrong, could be something else also.

**Blademaster** · 07 Jun 11,, 15:22

Sumku, the reason why it costs $410 million per plane because it includes other offsets such as the wind tunnel testing for supersonic planes, engines (engines comes separate from the plane cost), spares and lifecycle costs, engines, maintenance depots and training, simulators, etc. It is the complete package that you need to support and maintain the C-17s, i.e., specialized tools, software, etc. When India purchases more C-17s, it won't cost $410 million per plane. The unit cost will go down.

I think it is a very good deal because it boosts the IAF's airlift capability to such a degree that Il-76s couldn't before especially with the spares problem.