Cost Negotiations of Tata-Airbus C-295 Plane for India Complete

India’s C-295 transport aircraft procurement moving at a snail’s pace, has taken a step forward with the defense ministry and the contractors – Tata and Airbus, having reached an agreement over price of the jets.

“Cost negotiations for the C-295 deal have been completed. It is now being processed to put it up for clearance from the Cabinet Committee on Security (CCS). It is expected to be signed in the next few months,” a senior defense official was quoted as saying by The Hindu on Tuesday. 

Defense Acquisition Council (DAC), the defense ministry’s highest decision-making body on procurement, was expected to provide a waiver on some technical issues after the concerned parties concluded cost negotiations. “But the issues have now been resolved,” the sources added.

The acceleration of the program sets the ball rolling for New Delhi’s plan to replace the Air Force’s 56 obsolete Avro planes. A further six aircraft for a maritime mission role for the Indian Coast Guard have been added taking the total number required to 62, estimated to cost upwards of $3 billion.

“The contract could be signed in this financial year,” the sources say, but lack of funds could push the deal further. The country recently bought five additional Akash Surface-to-Air systems; and it plans to buy 83 Light Combat Aircraft (LCA) Tejas jets in this fiscal year.

As part of the deal, 16 aircraft will be built by Airbus at its manufacturing facility and delivered in fly away condition and the remaining will be built locally by the Tata-Airbus joint venture under transfer of technology.

The sole bid by Airbus and Tata with the C-295 aircraft for the Avro replacement programme was approved by the DAC in May 2015, but the contractual negotiations have been repeatedly delayed. The Request For Proposal (RFP) was issued to global firms in May 2013.

This deal has become even more critical as a separate project to jointly co-develop and produce a Medium Transport Aircraft (MTA) of 20 tonnes with Russia to replace the An-32s in service was scrapped after initial design discussions.

The An-32s, which are the workhorse of the IAF, are currently being upgraded instead under a $400 million deal finalised with Antonov state corporation of Ukraine in 2009. Although the planes are not due for immediate replacement as they have residual air frame left, the IAF has no future MTA lined up. In the absence of a new MTA development project, there is discussion on making the C-295 the replacement for the An-32 fleet in future.