Ahead of PM Modi’s US visit, CCS clears $2.5-bn Boeing deal

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New Delhi | Updated: September 23, 2015 9:10:41 AM

Contract for 22 Apache helicopters, 15 Chinook choppers pending since 2013

apache helicopterCCS today cleared a .5 billion deal for 22 Apache and 15 Chinook heavy-lift helicopters with Boeing. (Reuters)

The Cabinet Committee on Security on Tuesday cleared the long-delayed $2.5-billion deal for 22 Apache attack helicopters and 15 Chinook heavy-lift choppers with American aviation giant Boeing. The clearance coincides with Prime minister Narendra Modi’s visit to the US starting Wednesday.

The deal, pending since 2013 despite the finalisation of cost negotiations, was expected to be inked earlier this year during the visit of US defence secretary Ashton Carter, but that was not to be.

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 aviation major has been very patient and was keenly awaiting the final clearance by the CCS.

The company has been responsive to New Delhi’s request to maintain the price of Apache and Chinook helicopters being offered to the Indian Air Force (IAF) at $2.5 billion (Rs 15,000 crore) by another three months. The earlier price quoted by the American major was to have expired on June 30. So far the price deadline has been extended at least 10 times since 2013 for 22 Apache AH-64E and 15 Chinook CH-47F.

Boeing and with the US government had extended the validity of the price quoted by them for another three months in April hoping to wrap up the deal soon. The defence ministry had in March sought extension of the validity period on its expiry on March 31. The US firm had in February this year warned of a price hike if India were not to finalise the contract soon.

The contract will have clauses to place follow-on orders for 11 more Apaches and four extra Chinooks. Both the Apache and Chinook were selected in a competitive bid over the Russian Mi-28N Night Hunter and the Mi-26 Halo heavy-lift helicopter, respectively, in 2012. The Apaches and Chinooks are being acquired under a direct commercial sale and the weapons, sensors, engines and training under foreign military sales (FMS). India will also be acquiring Hellfire missiles and around 8,000 rockets.

The Apache is considered by experts to be the world’s premier anti-tank attack helicopter. In its flight evaluation trials, the IAF had picked the Apache ahead of the Russian Mi-28N Night Hunter. Similarly, the IAF had concluded that the Chinook heavy-lift chopper had a lower life-cycle cost than the Russian Mi-26 helicopter and was, therefore, the lowest bidder in the competition.

In April this year, the US company had extended the price deadline and had indicated to the government that this would be the last time. The files are sent by the defence ministry to the finance ministry, and after being approved by the finance ministry it goes to the CCS for approval.

Over the last decade US defence companies have bagged defence contracts from India worth around $10 billion, including for aircraft like P-8I maritime surveillance planes, and the C-130J Super Hercules and C-17 Globemaster-III in the transport category.

Modi leaves for the US on Wednesday to attend the UN General Assembly.

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