NEW DELHI--India's Defense Ministry has approved the purchase of
56 transport aircraft from Airbus Group NV in a deal valued at
$1.87 billion and has given the go-ahead to a long-stalled deal to
acquire howitzers from BAE Systems PLC.
A high-level committee headed by Defense Minister Manohar
Parrikar signed off on acquiring the C295 military plane which
Airbus said it will build in partnership with Tata Advanced Systems
Ltd., ministry spokesman Sitanshu Kar said.
Airbus will assemble 40 of the transport planes in India after
the first 16 have been delivered from the existing Spanish
production facility. Airbus said it "welcomed" the decision by the
ministry's procurement council. The aircraft would replace the
Indian air force's aging fleet of Avro jets.
The move is a significant step in the Indian government's push
to get foreign defense companies to do more work in India. India is
one of the world's largest importers of weapons.
The involvement of Tata also underpins a government push to
broaden the involvement of the private sector in defense
contracting.
India recently also agreed to buy 36 Dassault Aviation SA Rafale
combat jets directly from France after a deal to partly build them
in India stalled because of the complexity of the deal.
The government on Wednesday also signed off on the purchase of
145 M777 howitzers from London-based BAE Systems, Mr. Kar said. The
company has offered to build a howitzer assembly and test facility
in India as part of the deal.
BAE Systems closed plants in the U.S. and U.K. involved in
building the M777 amid repeated delays in the Indian deal, though
units in both countries would be heavily involved in building the
equipment for India. The weapon, which fires 155mm shells, is due
to be used on the Indian border with Pakistan and China.
Financial terms for the transport plane and howitzer still have
to be finalized before Airbus and BAE Systems can book the
contracts. Those negotiations are often protracted in India.
Write to Niharika Mandhana at niharika.mandhana@wsj.com and
Robert Wall at robert.wall@wsj.com
Access Investor Kit for BAE Systems Plc
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=GB0002634946
Access Investor Kit for Airbus Group
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=NL0000235190
Access Investor Kit for Fugro NV
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=NL0000352565
Access Investor Kit for Airbus Group
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0092791005
Access Investor Kit for BAE Systems Plc
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US05523R1077
Subscribe to WSJ: http://online.wsj.com?mod=djnwires