India Likely To Sign Boeing Helo Deal During Carter Visit

India is likely to sign a nearly $2.5 billion deal for 22 AH-64E Apache and 15 CH-47F Chinook heavy-lift helicopters during an upcoming visit by U.S. Defense Secretary Ashton Carter.India’s Cabinet Committee on Security is expected to soon give final approval for the deal after aircraft manufacturer Boeing OK’d extending the window for the agreed-to price until June 30.

The exact dates for Carter’s visit have not been announced, but it is expected in late May or early June.The Apache deal will involve a direct commercial sale (DCS) with Boeing for the platform and a foreign military sale (FMS) with the U.S. government for engines, sensors and armament. The unarmed Chinook will be acquired via the DCS route without an FMS component.

This is the third time Boeing has extended the price window for both helicopters since cost negotiations concluded about 20 months ago. The last six-month extension ran from October 2014 to March 31.Boeing recently said it might be forced to increase the negotiated costs if India continued to delay the procurement process. India’s Defense Procurement Procedure mandates re-tendering all acquisitions following any change in negotiated price.“We have done our bit and are awaiting the decision of the Indian government. It would be in everyone’s interest to have an early decision,” a Boeing official had said.

There had been hopes the deal would be signed during President Barack Obama’s January visit to India. But a defense ministry official says the government was forced to delay approval due to budget constraints.

Last August the Defense Acquisition Council OK’d offset proposals required in the procurement policy. That took the proposal through the Foreign Military Sales (FMS) route and a step closer to being finalized.

Procurement rules require any foreign vendor receiving an Indian defense deal worth more than 3 billion rupees ($48.3 million) to reinvest 30% of the value into the country’s industry. The rules were recently revised to put a 20% penalty cap of the total offset obligations on foreign military firms that fail to fulfill their requirements within the set time frame.