Rs 3,000 cr strings with Indian Airlines order

Aircraft manufacturer will have to undertake 30% counter-purchase from India

Whichever aircraft maker bags the Rs 10,000 crore order from Indian Airlines, will have to undertake counter-purchases to the tune of Rs 3,000 crore from India.

According to the terms of the contract drawn up, the company bagging the order will have to undertake counter-purchase to the tune of 30 per cent of the total value of the contract.

If a consortium of companies, including aircraft makers, aircraft service providers and aircraft engine makers, get the project, each party will have to undertake such a counter-purchase.

According to sources, this has been done to ensure that the companies, which bag the contract, will invest back in India in terms of setting up their own facilities or give contracts to Indian companies.

As per the terms of the contract, once the deployment of new aircraft starts, the government will appoint a nodal agency to negotiate with the aircraft maker the terms under which the counter-purchase will be made. "Besides, modalities about the way it will be undertaken will also be decided by the nodal agency," said a government source.

Meanwhile, in a last ditch effort to win the Indian Airlines order, Boeing today offered to reduce its bid price by Rs 700 crore. Boeing has also offered to buy back Boeing 737 aircraft used by Alliance Air, the subsidiary of Indian Airlines, and replace the fleet with 737-800 aircraft.

The offer comes in the wake of the Congress-led government's move to have a re-look at Indian Airlines' plans to order 43 aircraft from the European aircraft maker, Airbus Industries.

"We hope to get a fair and transparent evaluation," Dinesh Keskar, vice-president (sales), Boeing, said here. The company is, however, yet to get a response from the airline on its offer.

According to sources, the last offer by the aircraft maker was made about a month back when executives from Boeing met Indian Airlines officials.

Keskar also said the company was ready to offer a fair price if Air-India opted for leasing out of three more jumbo 747-400 aircraft to augment its fleet on a short-term basis.

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Fleet control

• In case a consortium gets the project, each party will have to undertake a counter-purchase.
• This will ensure that companies will invest back in India in terms of setting up their own facilities.
• The government will appoint a nodal agency to negotiate the terms for the counter purchase.