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Eyes on defence deals, Western powers rush to court India's PM Narendra Modi

Jun 29 2014, 20:07 IST
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Prime Minister Narendra Modi with chairman of UNIQLO, Tadashi Yanai (2nd from left) in New Delhi. PTI Prime Minister Narendra Modi with chairman of UNIQLO, Tadashi Yanai (2nd from left) in New Delhi. PTI
SummaryLaurent Fabius will meet Narendra Modi as well as his most powerful minister, Arun Jaitley.

building the Rafale in partnership with India's state-run Hindustan Aeronautics Limited (HAL) have complicated talks with France, and London has never entirely given up hope that it will return to the race.

However, on Thursday, one source at the Indian defence ministry said the deal was likely to be finally closed during Fabius's visit and could be signed this year. A French foreign ministry source said talks were continuing, but declined to give any details.

Russia, for years India's top weapons supplier, has already sent Deputy Prime Minister Dmitry Rogozin to visit the new government in Delhi, two weeks ago. Washington last year replaced Moscow as India's top defence supplier, according to IHS Jane's.

The Western nations will have noted that India's foreign minister expressed displeasure with Russia's recent offer to sell Mi-35 attack helicopters to India's arch-rival Pakistan.

"I don't think it's a competition," U.S. Assistant Secretary of State Nisha Biswal said after an early post-election visit to New Delhi.

"India will have strong and positive relationships with a variety of countries and that is to be encouraged," said Biswal. "We want to see India taking on a stronger and a leadership role in the region and around the world so we welcome that."

U.S. government officials are pushing hard for $2.8 billion in delayed sales of Boeing's Apache attack and Chinook military transport helicopters to be among the first completed under the new government, according to sources familiar with the issue.

The $1.4 billion order for 22 AH-64D Apaches was first approved in December 2010. A separate deal for 15 heavy-lift CH-47F Chinook helicopters is also valued at $1.4 billion. Boeing declined to comment on the prospects for the two orders.

$6 BILLION SPREE

India spent some $6 billion last year on weapons imports. It makes few of its own weapons, beyond ballistic missiles and assembly lines for foreign jets.

On Thursday, the government signalled it was in the mood for liberalisation by allowing manufacturers to build more defence components without licences, making it easier for Indian firms to partner foreigners.

At present foreign companies can only invest 26 percent in Indian defence projects without committing to technology transfer, which has put off many investors.

Before the election, sources in Modi's Bharatiya Janata Party said there was a plan to increase the cap to 49 percent.

"For higher-tech intellectual property we would want to go over 50 percent to be in a position to share technology that we have significant

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