Copter deal: India seeks extension of price validity

The Defence Ministry has again sought extension of the validity period for the price quoted by Boeing for the USD 2.5 billion deal for 22 Apache and 15 Chinook heavy-lift helicopters.
Boeing has extended the price validity for both helicopters at least twice since cost negotiations concluded in 2013, with the last extension for a period of six months granted in October 2014.
Defence sources said the US government and Boeing are likely to extend the deadline, which ends on March 31, as has been done in the past.
"The Defence Ministry is processing the deal and it will then be taken up in the Cabinet Committee on Security. Since, the deadline for the price quoted ends soon, an extension has been sought," the defence sources said.

The US firm had in February this year warned of a price hike if India does not finalise the contract soon.
"They (Defence Ministry) kept asking for extensions and we did provide them as and when appropriate. It is not always possible to keep extending, because we live in a world where we feel inflationary pressure," Boeing India President Pratyush Kumar had said in a press conference here.

Incidentally, the present Defence Procurement Policy does not allow room for increase in price once a bid has been shortlisted.
The defence sources have earlier said that in the event of the original manufacturer seeking a higher price than the one agreed upon, the tender can be terminated and a fresh one issued.

The deal for the Apache is a "a hybrid one", with one contract to be signed with Boeing for the helicopter and the other with the US government for its weapons, radars and electronic warfare suites.
The US has been pushing for this contract as it will further bolster American presence in the defence market of India.
American companies have over the last decade bagged defence contracts from India worth around USD 10 billion, including for aircraft like P-8I, C-130J 'Super Hercules' and C-17 Globemaster-III.