Sources from India’s Defense Ministry told Sputnik that the government is planning to seek an extension of the deadline for the deal that was to be signed before September 5 if India was to purchase the guns at the original price quoted by BAE. According to sources, BAE has demanded a 10 percent increase in price if India chooses to sign the deal after the September 5 deadline. This is the second time India would be seeking a deadline extension.
The original deadline for signing the deal was August 5, which the US had extended by one month following a request made by India. The Defense Acquisition Council, the apex decision making body of India’s Defense Ministry, had given its approval to buy 145 M777A2 howitzers for the Indian Army under the Foreign Military Sales route.
Informing the Parliament a month ago about the status of the deal, Manohar Parrikar, India’s Minister of Defense, had said, “Acceptance of Necessity (AoN) has been accorded for the procurement of 155mm / 39 Calibre Ultra-Light Howitzers from USA under US Foreign Military Sales route at an approximate cost of USD 737 million.”
However, earlier this year BAE system announced that 30% of total deal’s value would be discharged as offset for which the company selected Mahindra Defence & Aerospace as an Indian equipment manufacturer. Out of a total of 145 howitzers, 25 will be purchased in ready to use form while the other 120 will be assembled in India.
However, the deal has hit another roadblock as India’s Defense Ministry, which will be required to pay USD 110 million at the time of signing, is cash-strapped at the moment because of the numerous deals signed in the recent past.
India has signed a total of 108 contracts with a value of USD 16.946 billion in the last two years.
