Boeing Company’s Tail Being Twisted By Defence Ministry Of India
India has already bought 12x P8 I long range maritime recce aircrafts from the American Company Boeing. The total cost was over INR 22500 Crores. As per the deal, the American Company was to invest 30% or INR 6750 Crores in India by the time the final aircraft was delivered.
Thus as per the offset agreement, 30% of the value of the order given to Boeing had to be spent in India by the company but nothing has materialized till date. So now Boeing CEO Dave Calhoun has been called to India fir some tail twisting. India has for the time being cancelled further orders of 6x P8Is because Boeing has been acting too smart.
So the real reason for Calhoun visit is the show-cause notice served by the Ministry of Defence (MoD) against Boeing for its failure to implement the offset deal in relation to the earlier purchase. Boeing had promised to build a Maintenance, Repair and Overhaul (MRO) facility for the P-8I aircraft in India.
Besides India, Australia also operates these aircraft. South Korea and New Zealand are expected to be new customers of Boeing. The US Navy operates a few dozen of these aircraft in Asia. But there is no dedicated MRO for these aircraft in Asia.
Keeping all this in mind, Boeing was asked by the MoD to discharge its offset obligation worth over INR 6750 Crores by setting up a state-of-the-art MRO in India to service these aircraft. But even after years of signing the deal, the MRO is nowhere in sight.
Boeing has reportedly spent only a fraction of its offset commitment. The MoD has, therefore, asked Boeing why it should not be denied any future contracts in view of its failure to honour the offset deal. Sources said the purpose of Calhoun’s visit was to smoothen the ruffled feathers in New Delhi.
It seems as a sort of a waiver, Calhoun has been permitted to call upon Shri Narendra Modi. However in case they dither on the Offset then unceremoniously the deal for 6x P8Is will get cancelled. The Navy with help of DRDO then could go in for 12x C295 as medium range recce aircrafts. These are to soon start rolling out from our Kanpur plant.