Indian Air Force (IAF), the Indian Ministry of Defence has asked Washington to
come clean and disclose the comparative prices at which the aircraft
has been sold to other nations.
The last-minute incident has come after the ministry received several
representations contending that the price being quoted to India for 10
heavy lift aircraft was inordinately high.
While the contract is in the final stage — commercial negotiations with
manufacturer Boeing have been concluded —the ministry has sought a
clarification from the US on the price of the aircraft, which is being
purchased by the Foreign Military Sales (FMS) route.
FMS is the US Department of Defense’s government-to-government method of selling US defence equipment, services and training.
“We have to ensure that we are getting the aircraft at the right price.
The ministry has written to the US government for the price at which the
aircraft has been sold to other countries. This has been done to get a
fair assessment of the deal and put all speculation at rest,” a Defence
Ministry official said.
The value of the deal — a highlight of President Barack Obama’s visit to
India — has been pegged at $4.1 billion by the White House, and at $5.8
billion in the official notification before the US Congress. At either
price — $410 million or $580 million each — the aircraft would be the
most expensive ever purchased by India.
In a notification to Congress earlier this month, the US Defence
Security Cooperation Agency, which coordinates all FMS sales, declared a
C 17 Globemaster III aircraft is being sold to Australia for $300
Also, under the FMS programme, the US is supposed to sell the aircraft
to India at the price at which the US government purchases it from the
manufacturer, plus an additional facilitation fee. The US government
buys the C 17 from Boeing at around $200 million per aircraft. This
price, however, does not include spares and services.
Boeing says the price depends on the services and package required by
the IAF. “The end price will vary depending on what the Indian
government requires as part of the final package. That final price will
be a matter for the two governments to communicate at the appropriate
time,” the company said in a statement in November. It declined to
comment on current negotiations.
The company had said that the $4.1-billion tag quoted by the White House
did not include the cost of engines, spares and support. “$5.8 billion
is an umbrella figure that includes everything that could be ordered,” a
senior Boeing executive had said.
The IAF did not expect the aircraft deal to cost very much over $3
billion, and was taken aback by the price quoted by Washington. As first
reported by The Indian Express, a tussle had broken out over the price
after the IAF made it clear that it was unhappy over the “unrealistic”
estimate of the deal.