India and the US on Wednesday inked a $737 million (almost Rs 5,000 crore) deal for 145 M777 ultra-light howitzers, breaking the Bofors jinx. Guns will be mostly deployed near the borders with China in Arunachal Pradesh.
This is the first deal for artillery guns since the Bofors scandal in 1980s. The howitzers wil be brought in a government-to-government deal.
"India has signed the Letter of Acceptance which formalises the contract between India and US for these guns," sources said.
The deal for 145 American ultra-light howitzers, costing about Rs 5,000 crore was cleared by Prime Minister Narendra Modi-led Cabinet Committee on Security (CCS) on November 17.
The air portable 155mm/39 calibre gun, with maximum range of 30 km, is manufactured by BAE Systems.
The deal was inked as a two-day meeting of the 15th India-US Military Cooperation Group (MCG) began on Wednesday. India-US MCG is a forum established to progress Defence Cooperation between HQ Integrated Defence Staff and US Pacific Command at the strategic and operational levels.
The meeting commenced with the US Co-Chair Lt Gen. David H Berger, Commander US Marine Corps Forces, Pacific calling on Lt Gen. Satish Dua, CISC, HQ IDS. The MCG meeting is co-chaired by Air Marshal AS Bhonsle DCIDS (Operations), HQ IDS.
A 260-member delegation from the US Defence Forces and several officers from the three Services HQ and HQ IDS representing the Indian side are attending the bilateral event.
On the issue of M777, sources said India had sent a letter of request to the US government showing interest in buying the guns which will be deployed in high-altitude areas bordering China, in Arunachal Pradesh and Ladakh.
The US had responded with a Letter of Acceptance (LOA) and the Defence Ministry had in June looked into the terms and conditions and approved it.
Of the 145 M-777 howitzers to be delivered from mid-2017 onwards, 120 will be "assembled, integrated and tested" in India with artillery-manufacturer BAE Systems selecting Mahindra as its business partner here, a Times of India
The offsets, under which BAE Systems, manufacturer of the gun, will invest about $200 million, will be pursued independently.
While 25 guns will come to India in a fly-away condition, the rest will be assembled at the proposed Assembly Integration and Test facility for the weapon system in India in partnership with Mahindra.
The first two howitzers will be delivered within six months of the contract being inked, while rest will be delivered at the rate of two per month.
The howitzers that can be heli-lifted were first proposed to be bought from BAE about 10 years back.
Welcoming the signing of the agreement, BAE system in a statement said: "The company anticipates signing a contract in the coming weeks with the US Department of Defense to supply these M777 Howitzers to the Indian Army."
"We look forward to providing the Indian Army with the combat-proven M777," said Joe Senftle, Vice President and General Manager for Weapon Systems at BAE Systems.
"Our plan to establish a domestic Assembly, Integration and Test facility further demonstrates our commitment to 'Make in India' and remains a firm part of our strategy to work with the Indian defense sector across Air, Land, Sea and Security."
The $737 million contract has a 30 per cent offset clause worth around $200 million.
Out of 145 guns, BAE will deliver 25 guns and rest 120 will be assembled in India by Mahindra.