Modi signs off on Boeing military helicopter deal before U.S. trip


India’s cabinet on Tuesday cleared the purchase of Boeing’s Apache and Chinook helicopters in a deal worth around $2.5 billion, two government sources said, in a boost to defence ties with the United States.

The deal strengthens the status of the United States as one of India’s top military suppliers, along with Israel, dislodging Cold War-era ally Russia from its longstanding position as the South Asian nation’s main source of weapons.

The approval for 22 Apache attack and 15 heavy lift Chinook helicopters, meant to replace the military’s ageing Soviet-origin choppers, came just as Prime Minister Narendra Modi heads to the United States to drum up investments into India.
“Both have been cleared, the total cost is $2.5 billion,” a defence ministry source, who declined to be identified, because he is not authorised to speak to the media, told Reuters. A senior government official confirmed the decision.

The deal includes an option for 11 more Apaches and seven more Chinooks, an industry source with knowledge of the matter said.

India was the top foreign buyer of U.S. arms in 2013, says defense research firm IHS Janes, and the two governments are now negotiating a series of defense collaboration projects.

The two sides ended negotiations on the helicopters months ago, but budget constraints held up the deal. After India’s finance ministry gave the green light last week, the cabinet committee on security, headed by Modi, gave its approval on Tuesday, the defence ministry source said.

Boeing kept the price of the helicopters stable, despite inflation, extending it over deadlines more than 10 times, said the industry source, who declined to be identified because of the sensitivity of the subject.

In August, the price assurance was extended until Sept. 30, so India had to sign off on the deal before then, the source added.

The Indian Air Force picked the Apache and Chinook helicopters over Russian competitors in 2012. The Chinooks are to be part of a new mountain corps the army is putting together with the intent of deploying it on the border with China.

The two countries fought a brief border war in 1962.