India clears $4.1-billion defense deal, to create 22,000 jobs across US

India's Cabinet Committee on Security has cleared a $4.1 billion defense deal to buy 10 C-17 heavy lift aircraft from US-based Boeing.

The CCS meeting, chaired by Prime Minister Manmohan Singh, cleared the proposal for purchase of the planes from the US through the Foreign Military Sales (FMS) route, a Defence Ministry official said here.

This marks as the biggest defense deal between India and the US after America lost out in the bid for 126 fighter deal.

As per the proposed agreement, the US defense major Boeing, the manufacturer of the aircraft, will have to invest 30 per cent of the contract amount for setting up defence facilities in India, officials said.

The procurement involves offsets clause, under which a vendor bagging a defence deal worth over Rs 300 crore has to reinvest at least 30 per cent of the deal amount in Indian defence, homeland security or civilian aerospace sectors.

Earlier, the biggest deal with the US was worth USD 2.1 billion for procurement of eight P-8I maritime surveillance and anti-submarine warfare aircraft from Boeing through direct commercial sales in 2009.

Headquartered in Chicago, Boeing is the manufacturer of the C-17 aircraft. The C-17 is a large transport aircraft used for rapid strategic and tactical airlift of tanks, supplies and troops, as well as perform medical evacuations. It can land on short and rough runways.

According to Boeing, each plane supports 650 suppliers across 44 states in the US, and the order would support its C-17 production facility in Long Beach in California for an entire year. Boeing is the largest employer in the city.

Without the order by the Indian government, the last of the plant's current orders would be delivered in December 2012. The order has a $5.8 billion annual economic impact and the jobs of about 25,000 workers in 44 states depend on the C-17 planes, a Boeing spokesperson said.

The $4.1 billion transaction, all of which is US export content, would support an estimated 22,160 jobs, the US India Business Council said.