India eyes Sikorsky helicopter, other big U.S. arms buys

September 25
10:33 PM 2014

In a boost to U.S. weapons makers looking for ways to offset lower domestic military spending, India is expected to choose Sikorsky Aircraft's S-70B Sea Hawk helicopters at a 16-aircraft tender worth over $1 billion.

The decision could come during a high-profile visit to the United States by new Indian Prime Minister Narendra Modi that starts on Friday.

The Sikorsky deal would be one of several large U.S. arms purchases by India that are nearing completion, including over $2.5 billion in orders for Boeing Co's (BA.N) AH-64D Apache and CH-47 Chinook helicopters.

Sikorsky Aircraft, a unit of United Technologies Corp (UTX.N), declined comment on the potential helicopter order. Sikorsy is expected to beat out NH Industries, a joint venture of Airbus, AgustaWestland and Fokker Aerostructures.

Those deals could in turn lay the groundwork for a much larger order of 123 helicopters for the Indian Navy, said one of the sources, who was not authorized to speak publicly.

Boeing continues to negotiate with India on the Apache and Chinook helicopters and hopes to have signed contracts by the end of the year, said spokeswoman Caroline Hutcheson.

U.S. weapons makers, keen to offset declining U.S. and European military spending, are watching closely to see whether Modi delivers on his promises to expand India's strategic relationship with the United States.

India was the top foreign buyer of U.S. arms last year, according to defense research firm IHS Janes, and the two governments are now negotiating a series of specific defense collaboration projects that would involve more co-production.

U.S. industry executives are excited about possible opportunities in India, but caution that such deals often take longer to negotiate than expected.

Boeing already has a huge presence in India due to its sales of P-8 maritime surveillance aircraft and C-17 transport planes, and Modi is slated to meet Boeing Chief Executive Jim McNerney during his U.S. visit.

Boeing is due to deliver a sixth P-8I plane to India later this year, and two more next year. India may also exercise options for four additional P-8 aircraft next year, Boeing officials said.

The U.S. unit of Britain's BAE Systems Plc (BAES.L) is also ready for talks with India about the possible sale of up to 145 of its M777 towed 155mm howitzer artillery pieces, a deal valued at up to $885 million.

Rahul Madhavan, senior manager for aerospace and defense at the U.S.-India Business Council lobby group, said the Modi government appeared to be embracing the Defense Trade and Technology Initiative (DTTI), which aims to increase collaboration on 17 specific defense projects. 

"The Indian administration is taking this DTTI initiative forward and it is no longer perceived as just being a U.S. centered type of affair, or a one-way street," he said. "The win-win situation is now more apparent for both sides."

A DTTI deal that appears to moving forward calls for joint development and production of the next generation of Javelin "fire and forget" anti-tank missile system produced by Lockheed Martin Corp (LMT.N), which is in competition with Israel's Spike missile system, built by Rafael.

An Indian official said the Javelin deal fit with Modi's "Make in India" strategy, but New Delhi remained concerned that Washington was not offering the latest version of the missile.

Madhavan said India also appeared interested in other DTTI proposals, including a five-inch naval gun, unmanned surveillance vehicle system, mine-scattering vehicle, and various transport and naval helicopters.

Companies associated with the proposed DTTI projects include BAE Systems, Textron Systems, a unit of Textron Inc (TXT.N), Alliant Techsystems Inc (ATK.N), Boeing, Honeywell International Inc (HON.N) and General Electric Co (GE.N).

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