India Finalizes $2.5 Billion Purchase of Airbus C295 Aircraft

India has formalized a contract to procure 56 Airbus C295 transport aircraft in a deal valued at approximately $2.5 billion. The agreement, signed between the Ministry of Defense, Airbus Defence and Space, and Tata Advanced Systems Limited (TASL), is a key step in modernizing the Indian Air Force's (IAF) transport fleet.

Under the contract terms, Airbus will deliver the first 16 aircraft in flyaway condition from its assembly facility in Seville, Spain. The remaining 40 aircraft will be manufactured and assembled in India by TASL, marking a significant collaboration between the two companies. This initiative represents the first private-sector aerospace program under India’s "Make in India" campaign and includes manufacturing, assembly, testing, and lifecycle maintenance within the country.

The first batch of 16 aircraft is expected to be delivered over the next four years. The entire fleet, configured for transport and equipped with an Indian-developed electronic warfare system, will be delivered within 10 years. These aircraft will replace the aging Avro-748 models currently in service with the IAF.

Additionally, the Ministry of Defense signed an Offset Contract with Airbus, enabling the procurement of eligible products and services from Indian offset partners as part of the agreement.

According to Sukaran Singh, CEO of Tata Advanced Systems Limited, this initiative is a milestone for Indian military manufacturing. He stated, “For the first time, a private Indian company will manufacture an aircraft entirely in the country.” Airbus Defence and Space CEO Michael Schoellhorn highlighted that the program is expected to create 15,000 direct and 10,000 indirect skilled jobs over the next decade.

The C295 aircraft, with a transport capacity of 5-10 tons, is designed to operate from semi-prepared runways and features a rear ramp door for troop and cargo deployment. It will enhance the IAF’s tactical airlift capabilities, particularly in challenging regions such as the northern and northeastern sectors and the Andaman and Nicobar Islands.

This contract follows approval by India’s Cabinet Committee on Security earlier in September 2021.