| NEW DELHI
NEW DELHI Aug 7 India has offered to increase
an order for U.S. Apache helicopters to drive down costs as the
two sides race to close a $1.4 billion deal, officials said, the
first big military contract since a new government took office
in New Delhi.
The Apache gunships and a deal for Chinook helicopters, both
built by Boeing, top the agenda for visiting U.S. Defense
Secretary Chuck Hagel's talks on Friday with India's incoming
administration led by Prime Minister Narendra Modi.
India and the United States have rapidly expanded military
sales in recent years, despite discord in areas such as trade
and intellectual property rights.
Washington is keen to further step up defence cooperation
with India, which it sees as a key strategic partner in Asia in
the face of an increasingly powerful and assertive China.
India has offered a follow-on order of 39 AH-64D Apache
helicopters in addition to the 22 now being negotiated, a
defence ministry official said. The two sides have been
wrangling over the price of the gunships in a deal estimated to
be worth $1.4 billion.
The initial batch of helicopters is meant to replace the
Indian Air Force's ageing fleet of Soviet-era aircraft and will
be armed with Hellfire and Stinger missiles.
The Indian army has separately requested a fleet of at least
39 of these attack aircraft, some of which will be deployed as
part of a new mountain division it is raising along the disputed
border with China, an army official said.
"The point is we are looking at 60 to 70 pieces eventually,
so the expectation is the vendor will factor that in, in the
price negotiations," said the defence ministry official, asking
not to be named in line with ministry policy.
U.S. defence sales to India have grown from the low hundreds
of millions of dollars in the decade to 2008 to more than $9
billion since that year.
According IHS Jane's, a defence research firm, India was the
top foreign buyer of U.S. arms last year.
U.S. officials say there is the potential for billions of
dollars of new sales in the next few years and are hoping the
Modi administration can overcome bureaucratic obstacles that
have held up some deals.
The two sides are also in talks to finalise a contract for
the Indian Air Force to buy 15 CH-47F Chinooks, a twin-rotor
helicopter capable of lifting heavy loads, also valued at $1.4
Hagel's trip, which will also take him to Australia, is
focused on converging U.S. and Indian interests in the
Asia-Pacific, the Pentagon said.
It follows U.S. Secretary of State John Kerry's visit last
week and is part of the build-up to Modi's talks with U.S.
President Barack Obama in Washington in September aimed at
revitalising ties between the world's two largest democracies.
Hagel will discuss ways to strengthen military cooperation
with India including exercises, defence, trade, co-production
and co-development, Pentagon press secretary Navy Rear Admiral
John Kirby said.
India's cabinet has just cleared a proposal to allow 49
percent foreign participation in the defence industry, up from a
current cap of 26 percent, in a bid to boost local manufacturing
and end its decades-long dependence on overseas acquisitions
that made it the world's biggest arms importer in recent years.
Some Western manufacturers have been lukewarm about the
raising of the cap on defence investment, saying it did not go
far enough for them to transfer technology to India.
But Lalit Mansingh, an influential former Indian ambassador
to the United States who has been pushing for greater ties with
Washington, said it was a good start.
"Companies that want 100 percent will wait till the sector
is opened up fully, but I am pretty sure there are American
companies ready to come in," said Mansingh. "They have been
eyeing the market for a while now."
(Additional reporting by David Brunnstrom and Andrea Shalal-Esa
in Washington; Editing by Douglas Busvine and Mike