Boeing plans $300 mn investment in Indian defence sector

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N.C. Bipindra | 13 Apr, 2011
US aerospace major Boeing has submitted a $300-million plan for investment in the Indian defence industry as "offsets" for the four additional P8I long-range maritime patrol aircraft that India intends to buy for its navy, says a senior company official.

The four P8Is are a follow-on order from India, which has already signed a contract with the US for eight P8I platforms in maritime reconnaissance and anti-submarine warfare roles in January 2009 at a cost of $2.1 billion or Rs.10,000 crore.

Under the offsets (proportion of the order value to be invested in the domestic industry of the buyer) clause in the contract, Boeing will have to plough back in the Indian defence industry
30 percent of the $1 billion (Rs.4,500 crore) that these four aircraft would cost.

"We have an indication that the (Indian) government has approved four more (P8I) and it will also have offset obligation. We have given them some draft offset proposals," Christopher M. Chadwick, president of Boeing Military Aircraft, said in New Delhi.

India's defence ministry had approved the follow-on P8I order in October 2010.

"The P8I order, which we won a few years ago, is on track and we are delivering the first of the eight P8Is in January 2013. The customer has informally talked about the potential for four more P8Is. That will take it (the order) to 12 (aircraft). That programme is on track, on cost and on schedule," said Chadwick, who was here to review his company's performance in the Indian market.

The 12 P8Is are expected to plug a major gap in the Indian Navy's capabilities to keep an eye on adversaries in the Indian Ocean region, which India asserts is essentially its backyard.

Modelled on the Boeing 737 with cruise speeds of 445 knots, the P8Is have a mission range of 600 nautical miles and six hours of loitering time, apart from mid-air refuelling capability to extend the range to 1,200 nautical miles. They can also perform anti-submarine and anti-surface warfare roles, as they will be armed with torpedoes, depth chargers and Harpoon missiles.

Chadwick also dismissed rumours about India being upset with the $5.8 billion that the US has cited for the 10 C-17 Globemaster heavylift cargo planes for its air force.

He brushed aside claims that the deal may not go through in view of the comparatively low cost at which the C-17s were sold to other countries by the US under the foreign military sales route.

"There has been no direct request to us about the pricing (of C-17s). I think what we offered is very fair and allows us to meet the requirement of airplane capability and lifecycle costs. So we are waiting to see what they (Indian government) have to say. I think we are pretty close to signing the contract," Chadwick said.

He said their price for the 10 C-17s was "fair and transparent" and noted that the company's offset commitment plan had been approved already.

The gigantic C-17s are capable of carrying a payload of 164,900 pounds after taking off from a 7,000-foot airstrip. These four-engine aircraft can transport battle tanks and combat-ready troops over 2,400 nautical miles.

After the contract for the 10 C-17s is signed, India may go in for six more of these aircraft, with the IAF keen on increasing its heavylift capability.

On the Indian Air Force's (IAF) tender for 126 combat planes, which is at its final leg, Chadwick said Boeing, which has pitted its F/A-18s against five other global manufacturers' fighter jets, was waiting for word from the Indian defence ministry on the outcome of the over three-year process.

With both the flight and weapon trials and technical evaluation completed earlier this year, the defence ministry is expected to announce the winner of the contract soon.