MUMBAI/NEW DELHI - The Japanese manufacturer of US-2 amphibious aircraft operated by the Self-Defense Forces has entered talks with multiple Indian firms to set up a joint company in the event Tokyo and New Delhi reach agreement on joint production of the plane, sources said.
The two sides have stepped up talks over potential US-2 shipments to India since Japan eased its rules on exports of defense equipment and technology in April last year.
If the talks go without a hitch, it will be the first time for Japan to export already assembled defense equipment to a foreign country.
ShinMaywa Industries Ltd., the Hyogo Prefecture-based manufacturer of the US-2, is in talks with multiple companies, including Indian multinational conglomerate Mahindra Group, the sources said. ShinMaywa is also considering building a factory in India for maintenance.
Defense Minister Gen Nakatani and his Indian counterpart, Manohar Parrikar, are expected to discuss the potential purchase of US-2 planes when they meet in Tokyo on Monday.
The US-2, which costs roughly ¥12 billion, can take off and land on water even in bad weather and can be used in rescue operations.
For a deal to be clinched, India has told Japan that it wants to buy two US-2 aircraft built in Japan, and to then jointly produce around 10 more in India, according to the sources.
New Delhi is trying to reduce its reliance on imported weaponry, while Tokyo is aiming to strengthen security ties by exporting defense equipment and technology.
One area of concern is whether the Indian side can protect intellectual property and prevent the leaking of technology to third parties, the sources said.
The outlook for a deal to sell amphibious aircraft to the Indian Navy remains uncertain, however, as ShinMaywa needs to beat Russian and Canadian rivals. The Indian Coast Guard has also shown strong interest in the US-2, according to the sources.
A successful deal to produce Japanese defense equipment in India could set a precedent, given that Australia has shown strong interest in Japanese submarines to replace its aging subs.