The government has cleared the lone bid of Airbus-TATA consortium for replacing Indian Air Force's fleet of ageing Avro transport aircraft for Rs 11,930 crore besides approving Russia's offer to build Kamov Ka-226T helicopters under 'Make in India' initiative.
The Defence Acquisition Council, which met in New Delhi on Wednesday night, also cleared the proposal to convert two Boeing 777-300 ER for VVIP travel, defence sources said.
Other major proposals cleared in the meeting, chaired by Defence Minister Manohar Parrikar, included six new BrahMos supersonic cruise missile systems for the Indian Navy worth Rs 2,700 crore and acquisition of 145 pieces of M777 Ultra-Light Howitzers from the US under a government to government deal.
The DAC also set up a committee to work out the modalities, like price and offset, for the purchase of 36 Rafale fighter jets from France.
The big take-away from Wednesday’s meeting was the approval of the bid of Airbus-TATA consortium to replace IAF's 56 Avro aircraft with C-295 transport carriers.
While 40 aircraft would be manufactured in India, 16 would be bought off-the-shelf.
A final decision was anticipated in November last year but Parrikar had then sought more information about the necessity of the aircraft and the bidding process.
Under the current defence procurement policy, single-vendor situation is not entertained unless cleared by the DAC.
In May 2013, the ministry had issued a Request for Proposal to original equipment manufacturers, including US firms Boeing and Lockheed Martin, European multinational Airbus Defence and Space and Antonov of Ukraine, among others.
They were required to tie-up with an Indian private firm. However, only Airbus and TATA responded to the RFP.
"The Avro deal will create necessary eco-system for the growth of domestic aerospace industry," the sources said.
Another major bid that has been cleared is the Russian proposal to assemble advance twin engine Kamov helicopters.
The offer was made during the visit of Russian President Vladimir Putin last year in December.
Sources said that 200 light utility helicopter Kamov Ka-226T would be manufactured in India under Make in India initiative, adding that the cost and other modalities would be worked out later. They also said that some could be bought off the shelf.
The DAC also cleared Army's proposal to buy 145 pieces of BAE's M777 Ultra-Light for Ts 2,900 crore. The Army is in desperate need of new artillery guns.
Sources said this deal would be through Foreign Military Sales but the "spares, maintenance and ammunition will be operated through Indian systems".
The Indian Navy will get six new BrahMos supersonic cruise missile systems, with a range of 290 km worth about Rs 2,700 crore.
These would be fitted on board Talwar and Delhi class ships, the sources said.
The government also decided to take Air India's two Boeing 777-300 extended range (ER) as a replacement to the ageing Jumbo Jets used as VVIP aircraft for flying the President and the prime minister on long overseas tours.
The sources said no additional cost would be incurred on procurement of these aircraft. However, the aircraft will undergo a refit to cater to security threats and other
The aircraft, likely to be called Air Force One like that of American President, will be fitted with advanced self-protection suites to jam and beat hostile incoming missiles and encrypted satellite communication facilities.
"The two aircraft are seven-year-old and in excess which will be configured to VVIP planes," the sources said.
The DAC also cleared the Navy's proposal for setting up tele-medicine facilities for a cost of Rs 61.59 crore. It also allotted Rs 30 crore for "commencement of preparatory work for construction of Indian Aircraft Carrier 2".
The DAC also approved ALG communication terminal for the IAF at a cost of 149 crore.