Boeing CEO Dave Calhoun called on PM Narendra Modi on Saturday. The ostensible reason for Calhoun’s India trip is to sell six more P-8I long range maritime patrol aircraft to the Indian Navy. India has already bought 12 P-8Is from Boeing worth over US$3 billion. Sources said the real reason is the show-cause notice served by the Ministry of Defence (MoD) against Boeing for its failure to implement the offset deal in relation to the earlier purchase. As per the offset agreement, 30% of the value of the order given to Boeing had to be spent in India by the company.

Boeing had promised to build a Maintenance, Repair and Overhaul (MRO) facility for the P-8I aircraft in India. Besides India, Australia also operates these aircraft. South Korea and New Zealand are expected to be new customers of Boeing. The US Navy operates a few dozen of these aircraft in Asia. But there is no dedicated MRO for these aircraft in Asia.

Keeping all this in mind, Boeing was asked by the MoD to discharge its offset obligation worth over US$600 million by setting up a state-of-the-art MRO in India to service these aircraft. But even after years of signing the deal, the MRO is nowhere in sight. Boeing has reportedly spent only a fraction of its offset commitment. The MoD has, therefore, asked Boeing why it should not be denied any future contracts in view of its failure to honour the offset deal. Sources said the purpose of Calhoun’s visit was to smoothen the ruffled feathers in New Delhi.