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Boeing bags bulk of Air-India contract

Aviation ministry sources say India will finalise the acquisition of at least 12 Medium Capacity Long Range -- MCLR -- aircraft for Air-India with the Boeing Corporation during Prime Minister I K Gujral's visit to the US next week.

Official sources said a large chunk of the proposed purchase of 23 MCLR aircraft will go to the Seattle-based Boeing Corporation.

The price tag for the 23 aircraft: nearly $ 3 billion.

Officials said credit for Boeing clinching the multi-million dollar deal must go to US Assistant Secretary of State Karl Inderfurth who met Minister of State for Civil Aviation Jayanti Natarajan last fortnight and forcefully argued the American corporation's case. Inderfurth is learnt to have told Natarajan that Boeing would guarantee Air-India nearly 85 per cent of the cost of the aircraft purchased by it.

Aviation ministry sources said it is unlikely that the government will award the entire contract for the MCLR aircraft to Boeing. "It will be a mix of aircraft, but the largest number of planes will be bought from Boeing," an aviation ministry official told Rediff On The NeT.

Explaining the long delay in taking a decision on the MCLR aircraft issue, the official said, "the bogey of Bofors has haunted every government purchase since 1987."

It is expected that MCLR aircraft will also be bought from Airbus Industrie, the other manufacturer shortlisted by the ministry.

"The government will follow the letter and spirit of the Shahul Committee that evaluated various MCLR aircraft to avoid controversies, kickbacks and third party deals," one aviation ministry official said.

In its report, the Shahul Committee -- headed by retired Air Marshal Shahul -- had favoured mixed purchases for Air-India. The mixed bag of aircraft includes the Boeing-757, the MD-11 from McDonnell Douglas Corporation (which has since merged with Boeing) and the A-330 from Airbus.

Sources said Gujral will give the government's informal nod to buy at least 12 aircraft from Boeing during his US visit. A formal agreement will be signed later this year.

Officials say Gujral will use the Boeing contract as a bargaining chip and insist that Washington agrees to New Delhi's proposal for a six year phase-out for quantitative restrictions on imports.

The Clinton administration wants the Indian government to phase out quantitative restrictions on agricultural and textile items within two years.

The government knows Boeing has tremendous influence on Capitol Hill and with the White House and can tilt both the administration and Congress in India's favour if the MCLR contract goes its way. Boeing was one of the American corporations which reportedly lobbied last fortnight against a Bill moved by Congressman Dan Burton proposing a cut in fiscal assistance to India.

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