India Approves Purchase of 56 Airbus C295 Transport Planes

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 [e-mail] and Robert Wall at [e-mail]

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