This is the biggest-ever defence deal to be entered between the two countries.
The Cabinet Committee on Security (CCS) on Monday cleared a proposal to buy ten C-17 heavy lift military aircraft worth $4.1 billion from the U.S., the biggest-ever defence deal to be entered between the two countries.
“The CCS meeting chaired by Prime Minister Manmohan Singh cleared the proposal for purchase of the planes from the U.S. through the Foreign Military Sales (FMS) route,” Defence Ministry officials said here.
Under the deal, the U.S. defence major Boeing, the manufacturer of the aircraft, will have to invest 30 per cent of the contract amount for setting up defence facilities in India, they said.
As per the procurement procedure, offsets clause entails that a vendor winning a defence deal worth over Rs 300 crore has to reinvest at least 30 per cent of the deal amount in Indian defence, homeland security or civilian aerospace sectors.
The deal, which amounts to over Rs 18,000 crore, would be the biggest-ever defence contract to be entered with the U.S.
Prior to this, the biggest deal was worth $2.1 billion for procurement of eight P-8I maritime surveillance and anti-submarine warfare aircraft from Boeing through direct commercial sales in 2009.
India is planning to procure the aircraft for augmenting its fleet, which now comprises Russian-made transport aircraft Ilyushin-76 and Antonov-32.
After finalising the initial deal for 10 aircraft, the IAF is also planning to place orders for additional six C-17s.
The C17 will be the second American airlifter in the IAF transport fleet, which recently inducted the C130 J Super Hercules.
The four-engine C17 aircraft can lift two T90 tanks and artillery guns and are used for rapid strategic airlift of troops and cargo to operating bases throughout the world. It can also perform tactical airlift, medical evacuation and airdrop missions.
The aircraft has the capacity to carry over 130 fully-equipped combat ready troops.
However, the aircraft would come with some important communication equipment in absence of the contentious Communications Interoperability and Security Memorandum of Agreement (CISMOA) with the US.
In the recent past, India had finalised defence deals worth over USD eight billion, including the C130J, C—7, P8I and Harpoon anti-ship missiles. Several more multi-billion dollar deals are in the pipeline for being cleared in the near future.