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Airbus Wins $1.9 Billion Indian Military Cargo Plane Order

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India agreed to buy 56 transport aircraft from Airbus Group NV for 119.3 billion rupees ($1.87 billion) to replace an aging fleet, as Prime Minister Narendra Modi seeks to modernize the country’s military.

The C-295 planes, which will replace Avro cargo planes in the Indian Air Force fleet, will be jointly built with India’s Tata Advanced Systems Ltd., an Indian government official said in New Delhi late Wednesday, asking not to be identified because of internal policy. Sixteen of the aircraft will be built at Airbus plants in Europe, and the rest in India.

The announcement comes less than a week after an Airbus A400 transport plane crashed in Spain several minutes into a test flight prior to delivery to Turkey. The incident prompted air forces across Europe to suspend use of the A400 while the investigation is underway.

Since coming to office a year ago, Modi’s government has approved military projects valued at more than $40 billion as India moves to catch up with an assertive China, which spends three times that amount in military purchases every year. Modi has allowed more foreign investment in defense and is trying to overcome a history of graft scandals that slowed purchases.

Shares of Airbus slipped 0.8 percent on Wednesday to 60.20 euros in Paris.

Howitzers, Missiles

In addition to the transport plane order, India’s Defense Acquisition Council approved other orders Wednesday valued at at least $875 million. They include 145 BAE Systems Plc M777 howitzers, Indo-Russian BrahMos cruise missiles for six warships and 197 Russian Kamov helicopters. The helicopters will be manufactured in India.

The council also approved the construction of India’s second domestically built aircraft carrier.

The helicopters, like the local manufacture of the Airbus transport planes, are part of a plan to stoke domestic production after India surpassed China to become the world’s largest importer of weapons. Modi also is seeking to rely less on state-run companies that haven’t been effective in replacing obsolete military equipment.

Last month, Modi shelved plans to buy 126 Rafale warplanes from Dassault Aviation SA, which would have been the country’s biggest defense purchase in five decades. Under the contract, 108 of the planes would have been built in India by state-run Hindustan Aeronautics Ltd. Modi instead is negotiating a new contract directly with the French government for 36 such jets.

(Updates with shares in fifth paragraph.)