During his last term as the US President, India and the US had pledged to deepen defence and security cooperation by collaborating on co-development and production of advanced military systems. While some success has been made on this front, no major co-production project has yet taken off.
One of the first challenges will be to ensure that a deal for technology transfer and production of fighter jet engines in India takes off despite some last-minute speed bumps. India and the US have agreed on the production of GE414 engines locally, with 80% technology transfer.
However, in recent weeks it has emerged that the price may be a challenge as the US side has vastly increased its offer price from the estimated value. When the deal was signed last year, the estimated price was billed at around $1 billion for the first set of 99 engines to be made in India.
It is feared that fresh estimates shared with the Indian side recently could push this up to $1.5 billion. Given that India requires much more than 99 of these engines – estimates are in excess of 200 – there might be room for negotiations, but there is an urgency to close and sign the deal within the next three months.
Another Indian acquisition that will be keenly followed by the US is of new fighter jets, which are urgently needed by the Air Force. A special committee within the defence ministry is reviewing the requirement, but the Air Force has a projected urgent need for 114 medium-role fighter aircraft.This deal would involve local production and significant technology transfer and by conservative estimates would be valued at over $20 billion, staggered over a 10-year period. US companies Boeing and Lockheed Martin are keen to offer solutions for the requirements and have already tied up with local partners in anticipation of the upcoming tender.Another major co-production project underway where the US has significant interest is the requirement of medium transport aircraft for the Air Force. Estimated to cost over $5 billion, the deal would involve production of over 80 military transport aircraft in India with deep technology transfer. Lockheed Martin is a contender for the contract, which will see a challenge from Brazil and Europe.
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