Indian Air Force Buys Bombs from the U.S.

by: Matthew Potter
December 10, 2010

Category: Business Line, Companies, Contract Awards, Countries, Department of Defense, Events, India, Military Aviation, production program, Services, Textron, U.S. Air Force | RSS 2.0

One of the plans that U.S. and the European defense contractors are hoping will offset decline in business in their own countries due to budgetary pressures is to sell overseas. Asian, Middle Eastern and South American countries are expected to invest billions over the next few decades in their military. While the contracts won’t be as frequent or as large as the ones gained domestically they are still good business.

India has taken great strides in the past two years to reform its defense acquisition to allow greater competition from Western defense contractors. In the past the offset and investment requirements as well as regulations to encourage domestic growth made it hard for their market to gain much interest. Now India is trying to take advantage of the Western market to upgrade the overall technology of their military systems. India has signed deals with Boeing (BA) for P-8I Maritime Patrol Aircraft as well as considering the C-17 transport.

The biggest ongoing contract is for new fighters that has attracted competition from across the Globe with Boeing, Lockheed Martin (LMT), MiG, SAAB and the Rafale from France.

While these bigger deals percolate India has been signing some smaller ones. It was announced yesterday that Textron (TXT) will sell over five hundred aerial cluster bombs to the Indian Air Force. The contract was done as a Foreign Military Sale (FMS) from the United States government and is worth over $250 million.

While this represents only one percent of the company’s most recent quarterly revenue it is still welcome work.

If the U.S. defense budget does see serious decline it will be contracts like this that will help preserve the U.S. industrial base and keep companies going.

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