INTERVIEW - Boeing orders $600mln from India defence companies

NEW DELHI (Reuters) - U.S. aircraft manufacturer Boeing Co said on Monday it has started sourcing equipment worth more than $600 million from Indian firms for submarine fighting planes it is building for India.

India signed a $2.1 billion contract with Boeing in January to procure eight P-8I aircraft for its navy as part of an overhaul of the South Asian nation's mainly old Soviet military hardware.

"We have started to place contracts worth over $600 million with Indian companies, which will include supply of defence equipment for manufacturing the P-8I planes," Vivek Lall, India country head of Boeing's Integrated Defense Systems told Reuters in an interview.

"Suppliers recently awarded for this contract include Electronics Corporation of India, HAL's (Hindustan Aeronautics Limited) avionics division and Bharat Electronics Ltd," Lall said.

India, which is fast becoming one of the world's biggest arms importers, wants the P-8I warfare planes by 2013, Lall said.

The contracts were issued to comply with government's policy to manufacture 30 percent equipment locally on all defence deals with foreign companies, he said.

In October, the government changed its defence acquisition policy to allow domestic firms to bid for large defence contracts to open up the defence sector.

Until the policy change, local companies were not invited by the government to bid for big government defence projects and were left to supplying locally made, non-combative equipment.

The government wants foreign companies to collaborate with local manufacturers to make most of the equipment in India to save costs. Lall said the move would be a big boost to the domestic industry.

The country is looking to spend more than $50 billion over the next five years to modernise its weapons systems.

New Delhi also began field trials in August to buy 126 fighter jets in a $10.4 billion deal to modernise the air force.

Boeing's F/A-18 Super Hornet, France's Dassault Rafale, Lockheed Martin Corp's F-16, Russia's MiG-35, Sweden's Saab JAS-39 Gripen and the Eurofighter Typhoon, produced by a consortium of European companies, are in the race for the contract, one of the biggest in play.

Lall said Boeing has completed two phases of the trials in India and if the company won the lucrative contract, it would manufacture 108 of these planes in India with help from local companies.

"The Indian content will eventually entail over 30,000 parts and over 4,000 assembly tools in the final phase of production," Lall said. "We believe there are great opportunities in partnering with Indian private companies, surging into the defence market, offering defence products and services."

(Editing by Lincoln Feast)