India, Japan to push $1.65-bn amphibian plane deal

The leaders of India and Japan will discuss ways of taking forward the $1.65-billion US-2i amphibian search and rescue aircraft deal, when Prime Minister Narendra Modi visits the country later this month.

Highly-placed sources told FE, “On Monday, ahead of the India-Japan annual summit, there was a meeting in the ministry of defence to discuss issues related to the viability of acquiring the US-2i aircraft for the Indian Navy and Coast Guard.” The Indian Navy and Indian Coast Guard are seeking 12-18 of these platforms to expand their reach and capability.

According to sources who spoke on conditions of anonymity, “There have been series of meetings in the MoD and Monday meeting was perhaps final discussions before it is put up to the Defence Acquisition Council for approval or acceptance of necessity (AoN). Though India has yet to accept the Japanese offer, there is scope of bringing down the cost of these machines as there has been a price escalation due to the exchange rate – dollar to the yen.” Also, “The Japanese side are mulling over waiving off the royalty charges which is around 10% and also waiving off the consumption charges of 10%, adding up to a huge 20% concession.”

 

Since 2011, the discussions have been ongoing for this aircraft. But there has not been much of an action on the deal so far. Both New Delhi and Tokyo have been discussing and attempting to iron out all issues related to the purchase of ShinMaywa Industries’ US-2i amphibious aircraft and have had discussions with the Japanese government too.

Modi will be meeting his Japanese Prime minister Shinzo Abe during the annual summit in Tokyo from November 11.
The Japanese have offered to not only ‘Make in India’ for the world, but the parts for the aircraft will be manufactured in India, setting up MRO and re-exports. However, sources indicated, “That there is still no clarity about the number of aircraft that will be manufactured in India and what components will be allowed to be exported.”

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The Indian government has been keen on acquiring the ShinMaywa US-2i amphibious aircraft from Japan as part of their expanding bilateral strategic partnership, with both nations wary of China’s assertive behaviour in the Asia-Pacific region. However, there is no concept of foreign military sales in Japan, hence the DAC has to give an approval before it moves
forward.

It was during Prime Minister Modi’s visit to that country in 2014, for talks with his Japanese counterpart Shinzo Abe, that the two directed the Joint Working Group (JWG) to “accelerate progress in the discussions and preparations for a road map for the development of the Indian aircraft industry through the US-2i aircraft cooperation”.

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