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Boeing Asks India to Confirm Helicopter Deal Worth $2.5bn, Warns Govt of Price Rise
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Why India's 2.5-Billion-Dollar Chopper Deal With Boeing Could Shoot up in Costs
New Delhi: Ahead of Aero India, touted as Asia's biggest air show, aviation major Boeing has made it clear that it cannot wait indefinitely for the government to sign a deal for Apache attack helicopters and Chinook heavy lift choppers.
According to Pratyush Kumar, Boeing India president, "We are inching closer to a situation where our ability to hold prices will not be there." In other words, there is a possibility that India would need to re-negotiate the commercial aspects of the $2.5 billion (over rupees 15,000 crores) deal and end up paying more for helicopters that the armed forces urgently require.
Cost negotiations with Boeing ended 18 months ago; since then the company has agreed to extend the validity of negotiated prices twice with the latest six-month extension being granted in October 2014.
Sources in the Defence Ministry have indicated that the Cabinet Committee on Security may approve the purchase of 22 AH-64E Apache and 15 CH-47F Chinook helicopters before this financial year closes, but there are still no clear indicators of when that will happen.
File photo of 22 AH-64E Apache attack helicopter
India operates a Russian-built fleet of ageing Mi-35 attack helicopters that urgently need to be replaced by more modern choppers with better sensors and missiles.
The Apache, deployed widely during the first and second Gulf War, is considered by experts to be the world's premier anti-tank attack helicopter. In its flight evaluation trials, the Indian Air Force had picked the Apache ahead of the Russian Mi-28N Night Hunter.
Similarly, the IAF had concluded that the Chinook heavy lift chopper had lower life-cycle costs than the Russian Mi-26 helicopter and was therefore the lowest bidder in the competition.
Over the last few years, American aviation firms have won several deals in India totalling more than $8 billion. The Indian Air Force has acquired 10 Boeing C-17 Globemaster III strategic airlifters, eight Boeing P-8I maritime reconnaissance aircraft and six Lockheed Martin C-130J transport aircraft.
Why India's 2.5-Billion-Dollar Chopper Deal With Boeing Could Shoot up in Costs
New Delhi: Ahead of Aero India, touted as Asia's biggest air show, aviation major Boeing has made it clear that it cannot wait indefinitely for the government to sign a deal for Apache attack helicopters and Chinook heavy lift choppers.
According to Pratyush Kumar, Boeing India president, "We are inching closer to a situation where our ability to hold prices will not be there." In other words, there is a possibility that India would need to re-negotiate the commercial aspects of the $2.5 billion (over rupees 15,000 crores) deal and end up paying more for helicopters that the armed forces urgently require.
Cost negotiations with Boeing ended 18 months ago; since then the company has agreed to extend the validity of negotiated prices twice with the latest six-month extension being granted in October 2014.
Sources in the Defence Ministry have indicated that the Cabinet Committee on Security may approve the purchase of 22 AH-64E Apache and 15 CH-47F Chinook helicopters before this financial year closes, but there are still no clear indicators of when that will happen.
File photo of 22 AH-64E Apache attack helicopter
India operates a Russian-built fleet of ageing Mi-35 attack helicopters that urgently need to be replaced by more modern choppers with better sensors and missiles.
The Apache, deployed widely during the first and second Gulf War, is considered by experts to be the world's premier anti-tank attack helicopter. In its flight evaluation trials, the Indian Air Force had picked the Apache ahead of the Russian Mi-28N Night Hunter.
Similarly, the IAF had concluded that the Chinook heavy lift chopper had lower life-cycle costs than the Russian Mi-26 helicopter and was therefore the lowest bidder in the competition.
Over the last few years, American aviation firms have won several deals in India totalling more than $8 billion. The Indian Air Force has acquired 10 Boeing C-17 Globemaster III strategic airlifters, eight Boeing P-8I maritime reconnaissance aircraft and six Lockheed Martin C-130J transport aircraft.
Why India's 2.5-Billion-Dollar Chopper Deal With Boeing Could Shoot up in Costs
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India must seal $2.5 billion US chopper deals soon to avoid price hike: Boeing - The Economic Times
By TNN | 14 Feb, 2015, 10.07AM IST
NEW DELHI: India will have to fast-track the long-pending approvals for 22 Apache attack and 15 Chinook heavy-lift helicopters if it does not want a major cost escalation in the two deals currently worth around $2.5 billion.
US aviation major Boeing on Friday obliquely warned of a price hike if India did not close the two deals for its two iconic helicopters soon. "We are awaiting the Indian government's decision. We have extended the validity of our commercial bids when asked (in the past). But there is a point beyond which we cannot (hold the price line) due to inflationary pressures," Boeing India chief Pratyush Kumar said.
As was first reported by TOI, the AH-64 Apache gunships and the CH-47F Chinooks had outclassed their Russian rivals, Mi-28 Havocs and Mi-26s, in extensive field trials held by IAF since the entire competition began around five years ago.
(Chinook heavy-lift helicopter, representative image by Boeing)
But the final commercial negotiations with Boeing have since then proceeded at a slow pace, with the already much-extended validity of its bids slated to finally end on March 31. The "approval process" for the two chopper deals is currently with the defence ministry's finance department. They will also have to be examined by the finance ministry before they can be submitted to the Cabinet committee on security for the final nod, said sources.
The attack helicopter project is also likely to get bigger, with the Army last year getting "in principle" approval for "ownership" of 39 Apache gunships for its own "strike" formations after the IAF gets the first 22.
Both the Apache, armed with deadly Hellfire and Stinger missiles, and the Chinooks, equipped with powerful contra-rotating tandem rotors, have seen action in Iraq and Afghanistan. Their acquisition by India will be another shot in the arm for the US, which has already bagged defence deals worth around $10 billion for aircraft like P-8I, C-130J 'Super Hercules' and C-17 Globemaster-III over the last decade.
Six defence deals that US wants to crack with India
The Obama administration will push for the stalled mega deals for M-777 ultra-light howitzers and Javelin anti-tank guided missiles (ATGMs) with US defense secretary Chuck Hagel visiting India. Having bagged defence deals worth over $10 billion over the last decade, the US is obviously hungry for more.
We take a look at the big-ticket arms deals that US is eyeing with India
I think 22 Apache attack and 15 Chinook heavy-lift helicopters will be signed during the AERO SHOW 2015.
By TNN | 14 Feb, 2015, 10.07AM IST
NEW DELHI: India will have to fast-track the long-pending approvals for 22 Apache attack and 15 Chinook heavy-lift helicopters if it does not want a major cost escalation in the two deals currently worth around $2.5 billion.
US aviation major Boeing on Friday obliquely warned of a price hike if India did not close the two deals for its two iconic helicopters soon. "We are awaiting the Indian government's decision. We have extended the validity of our commercial bids when asked (in the past). But there is a point beyond which we cannot (hold the price line) due to inflationary pressures," Boeing India chief Pratyush Kumar said.
As was first reported by TOI, the AH-64 Apache gunships and the CH-47F Chinooks had outclassed their Russian rivals, Mi-28 Havocs and Mi-26s, in extensive field trials held by IAF since the entire competition began around five years ago.
(Chinook heavy-lift helicopter, representative image by Boeing)
But the final commercial negotiations with Boeing have since then proceeded at a slow pace, with the already much-extended validity of its bids slated to finally end on March 31. The "approval process" for the two chopper deals is currently with the defence ministry's finance department. They will also have to be examined by the finance ministry before they can be submitted to the Cabinet committee on security for the final nod, said sources.
The attack helicopter project is also likely to get bigger, with the Army last year getting "in principle" approval for "ownership" of 39 Apache gunships for its own "strike" formations after the IAF gets the first 22.
Both the Apache, armed with deadly Hellfire and Stinger missiles, and the Chinooks, equipped with powerful contra-rotating tandem rotors, have seen action in Iraq and Afghanistan. Their acquisition by India will be another shot in the arm for the US, which has already bagged defence deals worth around $10 billion for aircraft like P-8I, C-130J 'Super Hercules' and C-17 Globemaster-III over the last decade.
Six defence deals that US wants to crack with India
The Obama administration will push for the stalled mega deals for M-777 ultra-light howitzers and Javelin anti-tank guided missiles (ATGMs) with US defense secretary Chuck Hagel visiting India. Having bagged defence deals worth over $10 billion over the last decade, the US is obviously hungry for more.
We take a look at the big-ticket arms deals that US is eyeing with India
I think 22 Apache attack and 15 Chinook heavy-lift helicopters will be signed during the AERO SHOW 2015.
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