February 6, 2008 / 12:46 AM / 11 years ago

UPDATE 2-India buys Lockheed planes, US sees breakthrough

(Adds additional background in paragraphs 4-5)

By Jim Wolf

WASHINGTON, Feb 5 (Reuters) - India has agreed to buy six Lockheed Martin Corp (LMT.N) C-130J military transport planes in a breakthrough deal with the United States worth about $1 billion that opens a door to closer strategic ties, U.S. officials said on Tuesday.

India and the U.S. signed an agreement on Jan. 31 for Lockheed to start delivering the four-engine Super Hercules turboprop aircraft in 2011, said Bruce Lemkin, who handles U.S. Air Force international affairs.

The deal marks a major shift in weapons-buying policy by India, which for decades has relied heavily on Russian arms and transport aircraft.

The United States has been eager to boost strategic ties with India as a hedge against China’s military clout.

Nicholas Burns, the No.3 U.S. State Department official whose retirement was announced last month, wrote late last year that in reaching out to India, the United States was betting the planet’s future lay in democracy and market economics rather than “despotism and state planning,” an apparent swipe at communist-ruled China.

“It really provides the centerpiece of a growing relationship between our two air forces,” Lemkin, a deputy undersecretary of the Air Force who had been working on the matter for almost two years, said in a telephone interview.

James Clad, deputy assistant U.S. secretary of defense for South and Southeast Asia, said the deal dwarfed all U.S. defense sales to New Delhi since Indian independence from Britain in 1947.

“This kind of puts us in a new environment,” he said in an interview. “With this sale, India is telling us it’s ready to buy top-quality U.S. equipment on its merits.”

“It positions us to be in the Indian defense market for years to come,” he said.

Lemkin said the agreement provided for U.S. logistics support, training and spare parts as well as the aircraft.

Indian airmen would start training in the U.S., probably in Little Rock, Arkansas, in 2010, the year before deliveries start, he said.

The Pentagon’s Defense Security Cooperation Agency, which handles government-to-government arms sales, notified Congress of the possible sale last May, putting its potential value at $1.06 billion if all options were exercised.

Lockheed, the Pentagon’s No. 1 supplier by sales, and Boeing Co (BA.N), its next-biggest supplier, are bidding against Russian and European rivals for a potential $10.2 billion deal to sell the Indian air force 126 new multirole fighter aircraft.

Bethesda, Maryland-based Lockheed said it was pleased to see the acquisition process moving forward in India.

“The C-130J Super Hercules will provide the Indian Air Force with a highly advanced, flexible platform that will meet the range of missions unique to India,” said Cheryl Amerine, a company spokeswoman.

Officials at the Indian embassy in Washington did not return phone calls seeking comment. (Editing by Jeffrey Benkoe and Tim Dobbyn)

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