| NEW DELHI
NEW DELHI Aug 30 India has decided to acquire
Boeing's Chinook and Apache helicopters, an Indian
defence ministry official said on Saturday, in a deal valued at
$2.5 billion that could ease strained ties between New Delhi and
The new nationalist-led government of Prime Minister
Narendra Modi has grand plans to vastly strengthen India's
military capability, in order to play its role as a regional
power and meet challenges posed by a rising China and arch rival
"The defence aquisition council has cleared the last hurdle
for signing of the contract with the USA in respect of Apache
and Chinook," the official told Reuters, while declining to be
named as he was not authorised to speak to media.
The deal topped the agenda during a visit by U.S. Defence
Secretary Chuck Hagel in August and is likely to help mend ties
frayed by years of trade and diplomatic disputes. Modi is due to
visit the United States next month.
At a meeting on Friday, the government also approved the
Indian Navy's proposal to purchase 16 multi-role helicopters,
the official said. The deal could potentially benefit Sikorsky
Aircraft, a unit of United Technologies Corp (UTX.N) and
European joint venture NHIndustries.
Jaitley, however, cancelled a $991.65 million tender to buy
197 light-utility helicopters from foreign vendors and asked
local manufacturers to produce them at home, the official said.
Eurocopter, a unit of aerospace and defense company EADS,
and Russian Kamov had been participating in the
The government also deferred a decision on a $2.5 billion
proposal to acquire Israeli Spike anti-tank guided missiles.
Analysts estimate that India, the world's largest arms
importer, will spend $250 billion in the next decade to upgrade
its Soviet-era military equipment and narrow the gap with China,
which spends $120 billion a year on defence.
India's military modernization plan includes a renewed push
to develop a domestic weapons industry. India insists on
"offsets" from foreign vendors to ensure technology is
transferred or some of the deal's value remains in the country.
The decision to scrap the troubled light helicopter tender
comes weeks after Modi loosened the limit on foreign ownership
in defence manufacturing to 49 percent from 26 percent to make
"buy Indian" the default option for defence purchases.
"It has also been decided that the Indian Industry would be
given the responsibility to produce nearly 400 Light Utility
Helicopters (LUH) as per the requirement of the Indian Army and
Air Force," said the official.
A slew of kickback allegations, procurement delays and a
recent spate of operational accidents have marred efforts to
upgrade India's armed forces.
A decision on the acquisition of light reconnaissance
helicopters was deferred last year and tenders re-examined after
Italian prosecutors alleged defence group Finmeccanica
had paid bribes to Indian officials to win a separate $750
million deal to supply luxury helicopters for political VIPs.
New Delhi partially banned Finmeccanica this week from
bidding for future contracts. Finmeccanica denies any
Finmeccanica's AgustaWestland unit has a 32 percent stake in
NHIndustries, which is 62.5 percent owned by EADS'
helicopter unit Eurocopter, and Stork Fokker owns 5.5 percent.
(Reporting by Nigam Prusty; Writing by Rajesh Kumar Singh:
Editing by Frank Jack Daniel and Simon Cameron-Moore)