Offsets to bring $300mn Boeing investment in Indian defence industry

New Delhi: US aerospace and defence giant, Boeing Co, has offered a $300 million investment plan in the Indian defence industry by way of "offsets" for four additional P-8I long-range maritime patrol aircraft ordered by the Indian Navy, according to a senior company official.

The Indian Navy already has eight P-8I maritime reconnaissance and anti-submarine warfare aircraft on order from January 2009, at a cost of $2.1 billion or Rs10,000 crore. For reasons not clear, this initial order escaped the offset clause.

Under the offset clause companies have to plough back atleast 30% of the contract amount into domestic industry, either through purchase or access to services.

With the additional order for four P-8Is costing an additional $1bn, Boeing will have to look for ways and means to invest or source atleast $300mn worth of goods from the domestic industry.

"We have an indication that the (Indian) government has approved four more (P8I) and it will also have offset obligation. We have given them some draft offset proposals," Christopher M. Chadwick, president of Boeing Military Aircraft , has been quoted as saying by media sources.

Earlier reports have indicated that India's ministry of defence had cleared the additional purchase in October 2010. The announcement, however, was kept under wraps. As a matter of fact word of the deal is still emanating from Boeing sources rather than Indian.