India has signed a $640 million (Rs.2,900 crore) contract with Swiss plane manufacturer Pilatus Aircraft Limited to supply 75 PC-7 basic trainers for Stage-I flying training of Indian Air Force (IAF) rookie pilots.
The deal comes just a fortnight after the Cabinet Committee on Security, the country's highest Defence and security decision-making body, cleared it in a meeting on May 10.
Pilatus too confirmed the deal through an announcement, saying the deal with over 500 Swiss Franc or over $523 million.
"Pilatus Aircraft Ltd is proud to announce that the IAF has entered into a contract for over 500 million Swiss Francs to procure a fleet of 75 PC-7 MkII turboprop aircraft, together with an integrated ground-based training system and a comprehensive logistics support package," a statement said.
The Indian Defence ministry had late last year declared Pilatus as the winner of a tender issued two years ago following rigorous flight trials.
The Pilatus PC-7 was chosen over Korean Aerospace KT-1 and American Hawker-Beechcraft T-6C Texan-II planes.
"The contract also contains an option clause for extending the scope of this contract within three years from initial signature and we are optimistic that this will indeed be executed," it said.
The Pilatus planes will replace IAF's fleet of nearly 125 Hindustan Piston Trainer-32 (HPT-32) planes or Deepaks that were manufactured by the government-owned Hindustan Aeronautics Limited (HAL).
The HPT-32 fleet was grounded in 2009 following a series of air crashes, even as the aircraft has persisted with fuel supply system problems, resulting in 108 engine cuts and loss of 23 pilots.
The IAF joins over 30 countries in having Pilatus planes to carry out basic training for its pilots.
The company recognised that IAF is the fourth largest air force in the world with approximately 170,000 personnel and 1,500 aircraft operating from over 60 air bases.
"This contract will extend the fleet of Pilatus turboprop trainers to more than 900 aircraft operating worldwide," the statement said.
The PC-7 and the complete training system deliveries to the IAF is scheduled to commence in the last quarter of 2012.
The deal also brings upon Pilatus the obligation of establishing in-country depot level maintenance capabilities, which will also require technology transfer to HAL, enabling maintenance of the platform throughout its service life of over 30 years within India.
HAL, established in 1940, has approximately 35,000 employees based at eight sites across India. HAL has been tasked to design and develop a basic trainer plane to meet IAF's total requirement of 181 aircraft. With the 75 PC-7s being bought from Pilatus, HAL will build the rest 106 planes.
Pilatus has also entered into a separate off-set contract with the Indian government for 30 per cent of the contract value.
"We view this as a major opportunity. Pilatus has significant confidence in the Indian Defence market with its highly skilled workforce and it is our intention to leverage the offset opportunity to establish manufacturing capability for the region in support of our business plans for India," Pilatus said.