India OKs $4 Billion Deal to Buy U.S.-Made Aircraft

India's Cabinet has approved a proposal to buy 10 American C-17 military aircraft for more than $4 billion, the largest defense deal between the two nations, a defense official said Monday.

The deal requires the aircraft maker, Boeing Co., to invest 30 percent of the $4 billion in defense-related industries in India, said the official, who could not be named because he wasn't authorized to discuss the subject.

The approval comes after Boeing and another American defense manufacturer, Lockheed Martin, were rejected for a $11 billion deal to supply 126 fighter jets for the Indian air force.
The agreement to purchase the 10 heavy lifting aircraft must be signed by both governments before the manufacturer begins to deliver the planes, said Rahul Bedi, a New Delhi-based analyst for the independent Jane's Information Group.

The C-17 is a large transport aircraft and is used to airlift tanks, supplies and troops as well as perform medical evacuations. It is capable of operating from basic airstrips.

Since 2002, New Delhi has become a closer strategic and military ally of Washington following decades of hostile relations during the Cold War-era when it was a close Soviet partner, Bedi said.

So far the largest Indian defense deal with the United States was the purchase of eight Boeing P-8I long-range maritime reconnaissance aircraft for $2.1 billion in 2009.

India is expected to spend $80 billion over the next decade to upgrade its military.

Over the last few years, India has become the world's top arms and defense equipment buyer amid its rising concerns about growing Chinese power in the region and a traditional rivalry with neighboring Pakistan.

About 70 percent of India's current military hardware is of Soviet origin.