India seeks time extension on $3.1bn US copter deal
India has asked the United States for another month’s extension of the agreed price window in a $3.1-billion deal to buy 22 attack and 15 heavy-lift helicopters.india Updated: Aug 26, 2015 23:49 IST
India has asked the United States for another month’s extension of the agreed price window in a $3.1-billion deal to buy 22 attack and 15 heavy-lift helicopters.
India’s move comes after a US warning on revision of costs after the 12th extension expires on August 31. The much-needed acquisition has been hanging since September 2013, with files shuttling between the defence and finance ministries.
India seeks to purchase 22 Apache helicopters with option of purchasing 11 more for about $2 billion; the Chinook deal is for 15 helicopters with the option of buying six more for $1.1 billion.
US Ambassador to India Richard Verma and Major General James McDonald of the US Army Security Assistance Command separately wrote to the defence ministry this month, making it clear that it would not be possible to give yet another price extension beyond the stipulated date.
Last Friday, however, Air Vice Marshal Sandeep Singh, Assistant Chief of Air Staff wrote to General McDonald requesting 30 more days of time, and saying that the entire acquisition process was on the verge of being finalised. The US, and Boeing, the manufacturer of both helicopter types, were earlier told that the process would be completed by December 2014.
While the US response is still awaited, defence minister Manohar Parrikar is goading his bureaucracy to move the acquisition to Cabinet Committee of Security (CCS) next week.
“In case the US decides to revise the price after August 31, 2015, then the entire acquisition will have to be renegotiated. The Army decision to acquire M 777 light howitzers and air force decision to acquire additional C-17 heavy lift aircraft, both from US, went into limbo as the defence ministry could not take a final decision in time and the manufacturers were forced to revise the prices,” said a South Block official.
The IAF has three 1980s vintage Mi-26 heavy-lift copters and Mi-17 attack helicopters of similar vintage.
Despite the fact that India urgently requires Apache attack helicopters armed with Hellfire missiles as well as the twin-rotor Chinook for rapid troop deployment, the acquisition process has dragged on for six years. The bids for Apache and Chinook were submitted in 2009 and were opened by the previous UPA regime in 2012.
While Apache was the only one that met the specifications in the attack helicopter category, Chinook was selected as the lowest in terms of life cycle cost and initial price. The final contracts were negotiated in September 2013 and renegotiated again in November 2014 due to death of a defence ministry official in October 2013. The Defence Acquisition Council cleared the acquisition in August 2014.