India and Japan are all set to strike the first-ever defence deal, as the two countries have resolved US-2 aircraft price issue.

In 2014, India decided to acquire 12 US-2 amphibious aircraft for its Navy from Japan. However, talks between senior officials of the two countries suffered a blow as the Japanese manufacturer, ShinMaywa, refused to lower the quoted price of USD 133 million per aircraft. After two years of tough negotiations, New Delhi and Tokyo have announced that they resolved the issue and the Indian Navy will soon receive all the 12 aircraft.

A top Indian Defence Ministry official confirmed the news over the weekend, saying: “Japan has offered a price concession of more than 10% per aircraft from USD 133 million per aircraft to around USD 113 million. The USD 1.35 billion government-to-government deal for US-2 aircraft is now ready for finalisation.” The official, who wished to remain anonymous, also said that it would be easier for the Indian Navy to monitor movements of vessels in the Indian Ocean Region (IOR) after the acquisition.

Meanwhile, Indian Navy Commodore (Retired) and senior defence analyst Anil Jai Singh has welcomed the announcement, stressing that the Navy badly required the amphibious aircraft to safeguard India’s interests in the IOR. “Carrying out operational logistics support for the naval units (including ships, submarines and embarked assets) at sea, within the IOR or beyond is an operational gap that exists in the Indian Navy inventory,” added Singh.

Defence experts believe that it is a ‘strategic’ purchase, as India is strengthening ties with Japan as a part of its ‘Look East Policy’. They are of the opinion that it is not possible for India to counter China’s growing influence in the IOR and Pacific Ocean Region without Japan’s help. Singh explained: “The strategic importance of this needs no emphasis. It may be the first military export from Japan since WWII and hence sends out a very significant signal on the depth of the Indo-Japan strategic relationship as well as on the geopolitical dynamic of the Indo-Pacific.”

Both India and Japan showed some urgency in resolving the price issue after China announced in July that it had built the ‘AG600’ – the world’s largest flying boat. Talking to the local media in New Delhi, a senior Navy official said: “Once the potential acquisition of US-2 aircraft by India made news, development of the prototype of AG600 became a priority for China. The intended utilisation of the aircraft by China is almost similar to the perceived roles in India. Presence of Indian US-2 in the IOR and AG600 of China in the South China Sea may create an interesting military and strategic balance in the area.”

Senior defence analyst with Ernst & Young India Ankur Gupta is confident that the deal will bring the two countries closer than ever to throw a strong challenge to China. “With this positive movement towards the US-2 purchase, these ties will move to the strategic level. Should some part of the platform be manufactured in India, then it will boost local capabilities as well,” said Gupta.

Koushik Das, based in the Indian capital of New Delhi, is a senior news editor with more than 15 years of experience. He also runs a blog – Boundless Ocean of Politics. E-Mail: [email protected]