New Delhi: The process for approval by the Cabinet Committee on Security (CCS) chaired by Prime Minister Narendra Modi has been set in motion with the resolution of technical issues for the purchase of Airbus C-295 transport aircraft.
This follows the conclusion of price negotiations with Tata and Airbus for C-295 Transport Aircraft for replacing the ageing Avros transport aircraft currently in the Indian Air Force (IAF), sources said.
“The next step after the conclusion of cost negotiations is the clearance from the CCS and the process has started and once the approval is in place, the deal is expected to be inked soon,” the sources said.
There were some technical issues related to the deal raised during the discussions and these have now been addressed to the satisfaction of the Ministry of Defence (MoD).
While there is an urgent requirement to replace 56 Avro transport aircraft of IAF, the Defence Ministry has added six aircraft for the Indian Coast Guard (ICG) for their maritime operations, bringing the total cost of the deal to around $3 billion.
The closure of the financial year is four months away, and the availability of funds will be the main focus before the deal is inked. There are several other programmes of the IAF which are in the pipeline including the deal for 83 Light Combat Aircraft (LCA) `Tejas’ Mk-1A.
Once the deal between Defence Ministry and Tata and Airbus is finalised, under the agreement, the initial 16 aircraft are expected to be manufactured by the Airbus at their own facility and the balance will be built in India under the Tata-Airbus joint venture. This will be done under Transfer of Technology by the Airbus to Tata.
The RfP for the replacement of Avros was issued to the global players in 2013, followed by approval by the Defence Acquisition Council (DAC) in 2015. Airbus and Tata were the sole bidders pitching the C-295 aircraft.
On the completion of the Indian order, the company executives are optimistic about building global orders out of the Tata facility which will have a robust base of domestic suppliers that will feed the production line.
The Airbus Group has around 50 Indian suppliers from both public and private sector who are embedded in their global chain.
