MoD sources said in march, a delegation of senior officials, including from the Navy, visited the facilities where the amphibious aircraft is being produced. They also sought to iron out issues related to modifications "that would allow Japan to export the aircraft to India without violating its self-imposed defence export restrictions".
A friend-or-foe identification system will be removed from the aircraft, a defence official said. Both countries had, at that time, also discussed the possibility of India being permitted to assemble the aircraft indigenously, giving it access to Japanese military technology. The deal was put on hold because of general election in India.
"The deal is significant for a variety of reasons. On the surface, its another indicator of growing cooperation between India and Japan on security matters. The deal is doubly significant in the context of Indias relations with Japan because once India clinches the deal, it will become the first country to purchase defence equipment from Japan since the latters self-imposed ban on defence exports began in 1967. The deal is important for Abe as it would open up Japan's defence industry for additional contracts with foreign partners, said diplomatic sources.
Modi is expected to visit Tokyo enroute the BRICS summit in July, where he will meet with his counterpart, Shinzo Abe.
According to Japanese officials, the proposed sale of ShinMaywa US-2i amphibious, fixed-wing aircraft would not infringe on Japan's self-imposed ban on arms exports because the aircraft to be given to India will be unarmed and can be used for civilian purposes. The plane, built by ShinMaywa Industries (7224.T), could be outfitted for firefighting or as a kind of amphibious hospital and costs an estimated $110 million per unit. The plan is to deliver two aircraft and, then, assemble the rest of the planes with an Indian partner.
The Navy had issued requests for information on amphibian planes in 2010 to ShinMaywa, Canada's Bombardier for CL-415 platform, Russia's Beriev for Be-200 and US/German company Dornier for Seastar CD2. The Navy is also interested in Japanese patrol vessels and electronic warfare equipment as Tokyo moves further on easing its ban on military exports, the officials said.