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Economic ties between India and Japan are being reinforced with the two countries expected to clinch a $1.65-billion defence aircraft deal during Prime Minister Narendra Modis visit to the island nation later this month. Under the agreement, Japan will supply at least 15 ShinMaywa US-2 amphibious aircraft, designed for air-sea rescue, and which can also be used for civilian purposes, to the Indian Navy.
The deal would mark Japans entry into Indias lucrative, multi-billion dollar defence equipment market, dominated by the west.
According to sources, the proposed deal could possibly include joint production, operation and training on the US-2 amphibious aircraft. These planes, built by ShinMaywa Industries, could be outfitted for firefighting or as a kind of amphibious hospital and cost an estimated $110 million per unit. The plan is to deliver two aircraft and then assemble the rest of the planes with an Indian partner, the sources added.
The sources added that both Tokyo and New Delhi have finalised the agreement for sale of the fleet of aircraft used by Japans military to India. This would be the first complete defence product to be exported from Japan in more than 40 years.
During his visit to Japan, Modi is expected to hold a series of meetings with Japanese government functionaries including Prime Minister Shinzo Abe and captains of Japanese industry.
Japan is the worlds third-largest economy in terms of nominal GDP. Currently, the prominent features of the economic partnerships between India and Japan are an over $20-billion two-way merchandise trade that is supported by an all-inclusive free trade pact inked in 2011 and substantial Japanese involvement in high-profile infrastructure projects like the Delhi Mumbai Industrial Corridor and the western dedicated freight corridor.
If the ShinMaywa US-2 is exported to India for civilian use, that would be the first case of exports of Japanese-developed weaponry used by the defence ministry for civilian use, said a senior officer.