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Under the ‘Buy and Make (global)’ category of the Defence Procurement Procedure 2013, the Indian Navy is moving ahead with a proposal to acquire 12 US-2i aircraft from Japanese company ShinMaywa in 2015 for $1.65 bn. “This is being discussed as part of the Services Capital Acquisition Plan (SCAP) for 2015 at a meeting in the ministry of defence,” a source told FE.

There have been several rounds of hectic discussions on whether India will be permitted to assemble the aircraft indigenously, giving it access to Japanese military technology, and whether Japan will help in marketing and export, which will be a win-win situation for both.

Tokyo has been pursuing the sale of this aircraft to India as part of stepped-up bilateral defense cooperation for three years now. This was also discussed during the high-profile visit of PM Narendra Modi to Japan in 2014. “Also, both sides are interested in building the aeronautics industry in India.

The two sides have been working on several issues including: whether Japan will provide only the kit of the plane and India will carry out modification to fit the required sensors for sea surveillance.

A joint working group, a multi-ministerial team, was set up last year to iron out certain details, including important modifications that would allow Japan to export the aircraft to India without violating its self-imposed defense export restrictions.

Sources have indicated the acquisition process has been put on fast track as this is a deal which has been cleared at the highest political level. In the last few months there have been a lot of exchanges between the Indian Navy and executives of Japanese company ShinMaywa.

Chances are a private Indian partner might be roped in for licence manufacturing in India and the Japanese company will provide all technical support to the Indian partner for re-export of the planes.

The Indian Navy might end up with bigger orders for US-2i amphibious planes since the current requirement is for the first batch.

Japan, which has self-imposed ban on defense exports from 1967, was able to get special permission for export of this plane to India, but the Japanese have seen great interest in this planes from other countries too but its own policies will hinder sale of the planes.

The US-2i is a large Japanese Short Take Off and Landing (STOL) amphibious aircraft, which could significantly boost the Indian Navy’s capability for air-sea rescue.

Strategically, the US-2 is important for India beyond its relationship with Japan. The US-2i has a more than modest range of 4,500 km and India’s aircraft will be stationed in the Andaman and Nicobar Islands, in the Bay of Bengal.

Procurement of these planes directly counters Indian fears of China’s burgeoning “string of pearls” strategy in Southeast Asia.

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