India Resolves US-2 Aircraft Price Issue With Japan

21 October 2016

The first-ever defense deal between India and Japan is back on track after two years as Japan has offered a price concession for the purchase of 12 US-2 amphibious aircraft for the Indian Navy, according to an official with the Indian Ministry of Defence (MoD).

"Japan has offered a price concession of more than 10 percent per aircraft from $133 million per aircraft to around $113 million, and the $1.35 billion government to government deal for US-2 amphibious aircraft is now ready for finalization," the official said, speaking on condition of anonymity

Shortly after coming to power in mid-2014 and during his first overseas visit to Japan, Indian Prime Minister Narendra Modi announced his wish to buy US-2 amphibious aircraft, made by ShinMaywa of Japan, for the Indian Navy.

However, negotiations suffered as the Japanese refused to lower the quoted price of $133 million per aircraft.

Japanese Embassy diplomats here were unavailable for comment.

An Indian Navy official said the amphibious aircraft are required immediately for operation in the Indian Ocean region.

"Carrying out operational logistics support for the naval units (including ships, submarines and embarked assets) at sea, within the Indian Ocean region or beyond is an operational gap that exists in the Indian Navy inventory," the Navy official said.

Anil Jai Singh, a retired Indian Navy commodore and defense analyst, said the US-2 aircraft "will offer a capability to quickly react to a developing situation in our island territories, which are almost 700 miles from the mainland and strategically vulnerable."

The purchase from Japan is also regarded as strategic because New Delhi is building ties with Tokyo as part of its Look East Policy meant to counter China's influence in the Indian Ocean and Pacific Ocean regions.

"The strategic importance of this needs no emphasis. It may be the first military export from Japan since World War II and hence sends out a very significant signal on the depth of the Indo-Japan strategic relationship as well as on the geopolitical dynamic of the Indo-Pacific," Singh said.

After Japan overturned its self-imposed 1967 ban on the export of arms in 2014, India was expected to become the first country to purchase defense equipment from Japan with the acquisition of US-2 aircraft.

An Indian Navy purchase of US-2 aircraft is regarded as strategically critical after China announced in July that it had built the world's largest flying boat, the AG600.


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