Decks cleared for purchase of 10 C-17s with offsets

After considerable diligence and mathematics, India is all set to purchase 10 C-17 Globemaster strategic lift aircraft from US for $4.1 billion, with upfront offsets of $1.12 billion.

The Cabinet Committee on Security on Wednesday will consider a revised proposal for purchase of C-17s which, for the first time, outlines the offsets including a High Altitude Engine Test Facility and Trisonic Wind Tunnel Facility valued at $510 million, for the Defence Research & Development Organisation.

India’s access to advanced technology air tunnel would be important as it has depended on Russian test facilities to evaluate the indigenous Kaveri jet engine, which was to be used in the LCA project.

The other half of the offsets, according to the proposal, would be shared between Hindustan Aeronautics Ltd for training and maintenance for the aircraft, Tata Consultancy Services for defence strategic communication systems and Defence Land Systems — a joint venture between Mahindra Group and BAE Systems — for armoured vehicles.

The original proposal had talked of Boeing fulfilling its obligations under the Defence Procurement Procedure “as per policy” and hence, the offset was not stated. Under the DPP, any foreign company bagging contract worth over $300 million has to invest back at least 30 per cent of it into the Indian defence sector.

However, sources said, the C-17 offsets would cost India an additional 7-8 per cent in the total outgo on the purchase as the US has explained that it would be paying more for Indian offsets than it could have got the same services and products from other sources.

With this offset promise, decks have been cleared for the biggest-ever Indo-US defence deal under the American foreign military sales (FMS) programme, a direct government-to-government contract.

The four-engine Globemaster-III giant strategic airlift aircraft is capable of carrying a payload of almost 170,000 pounds and landing even at small forward airbases with semi-prepared runways and can transport tanks and troops over 2,400 nautical miles.

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Posted by pilotpaul on Jun 1 2011. Filed under All News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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