India is set to become the first country since World War Two to buy a military aircraft from Japan, helping Prime Minister Shinzo Abe dismantle a ban on weapons exports that has kept his country's defence contractors out of foreign markets.The two countries are in broad agreement on a deal for the ShinMaywa Industries (7224.T) amphibious aircraft, which could amount to as much as $1.65 billion, Indian officials said on Tuesday.
However, several details need to be worked out and negotiations will resume in March on joint production of the plane in India and other issues.New Delhi is likely to buy at least 15 of the planes, which are priced at about $110 million each, the officials said.
"Its a strategic imperative for both sides, and it has been cleared at the highest levels of the two governments," said an Indian military source.
For the moment, a stripped-down civilian version of the US-2i plane is being offered to India, to get around Japan's self-imposed ban on arms exports. A friend or foe identification system will be removed from the aircraft, another defence official said.The two countries are discussing assembling the aircraft in India, giving India access to Japanese military technology, Indian Prime Minister Manmohan Singh has said.
The plane has a range of over 4,500 km (2,800 miles), which will give it reach far into Southeast Asia from the base where the aircraft are likely to be located, in the Andaman and Nicobar island chain that is near the western tip of Indonesia.
The navy plans to use the Japanese-built plane to support ships on long range missions, the military source said, a role that is increasing as it steps up its profile across the Indian Ocean to counter rival China."You are sailing further and further away, and ships break down at sea. You can either wait for reinforcements to arrive by sea or bring in an amphibian right next to the stricken ship," the source said.
The two governments have set up a joint working group that will meet in March to consider plans to either set up a plant in India to assemble it under licence by an Indian state manufacturer.The plan is to deliver two aircraft and then assemble the rest of the planes with an Indian partner, the military source said.The deal lays the ground for a broader Japanese thrust into India, the world's biggest arms market dominated for long by Russia but now also buying hardware from Israel and the United States.
"There is a whole amount of defence-related cooperation, between India and Japan," said Gautam Bambawale, an Indian foreign ministry official responsible for East Asia."We want Japanese technology, we want Japanese capital investment into India."
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