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Are India and Japan About to Conclude a $1.3 Billion Military Aircraft Deal?

 
 

Japanese manufacturer Shinmaywa Industries and Indian defense firm Mahindra Defense have entered a partnership to promote the sale of Shinmaywa US-2i amphibious search-and-rescue/maritime surveillance aircraft to the Indian Navy, the companies announced in April at this year’s Defexpo in Chennai, India.

The two companies signed a memorandum of understanding (MOU) on the sidelines of the biennial event earlier this month. “Signing this MOU on the side lines of this event offers both the companies to join forces in order to set up MRO [maintenance, repair and overhaul] services / manufacturing and assembling of structural parts & components for US-2 amphibian aircraft,” an April 11 statement reads.

India and Japan have been locked in negotiations over the purchase of US-2i aircraft for the past two years. In December 2015, Indian Prime Minister Narendra Modi and Japanese Prime Minister Shinzo Abe agreed to deepen defense cooperation between India and Japan. As part of the agreement, both sides consented to explore a possible sale of US-2i aircraft to the Indian Navy to further cement burgeoning Indo-Japanese defense ties.

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The Indian Ministry of Defense (MoD) has expressed interest in acquiring up to 12 US-2i aircraft, with tentative plans to station the short-take-off-capable search-and-rescue/maritime surveillance planes off the Andaman and Nicobar Islands in the Bay of Bengal. The MoD reportedly is considering buying two US-2i aircraft in fly-away condition, whereas the remaining 10 are to be built in India with a local partner. (Shinmaywa has also been pushing for a more expansive deal that would entail the sale of 12 off-the-shelf aircraft and the manufacturing of 18 more domestically.)

In 2016, Japan reportedly offered a 10 percent discount per aircraft from $133 million to around $113 million. (Neither India nor Japan publicly confirmed the price reduction.) The total contract value of the government to government deal is estimated at around $1.35 billion. It would constitute Japan’s largest overseas defense deal since it lifted its decades-long self-imposed ban on defense exports in 2014.

The MOU between Mahindra Defense and Shinmaywa is the first major indication that the two countries are serious about moving forward with the acquisition of the aircraft. “India and Japan are now discussing the methodology of procurement of Amphibian Aircraft US-2 requirements of the Indian Navy. Both nations are working on the way forward to induct this aircraft in India,”  the April 11 statement reads.

“Both Shinmaywa and Mahindra Defense have entered into this partnership with a view to set up MRO services in India and also undertake manufacturing, assembling of structural parts & components for US-2 amphibian aircraft etc.” Additionally, the press release notes that the “MOU also envisages both the companies to build up a strategic partnership for future versions of US-2 amphibian aircraft.”

Neither the Indian or Japanese MoDs have publicly commented on the recently signed MOU.  The Japan Maritime Self Defense Force currently operates five US-2is. The service is the sole operator of the aircraft worldwide.

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