New Delhi, April 10: India is set to float a mega $1.6 billion global tender to acquire 384 light observation helicopters for the Army and air force to replace the ageing Cheetah/Chetak fleet of the two forces.

The high powered Defence Acquisition Council (DAC), headed by Defence Minister A K Antony, gave its stamp of approval for the deal on Thursday and tenders are now expected to go out within the next two weeks. While 197 of the helicopters will be bought in a flyaway condition, the rest will be manufactured by Hindustan Aeronautics Limited (HAL) under a transfer of technology agreement.

Defence Ministry officials confirmed that the request for proposals will be sent to four major aviation companies - Bell (USA), Eurocopter (France, Germany and Spain), Augusta Westland (Italy) and Kamov (Russia).

While the requirement for light helicopters of both the Army and Air Force have been clubbed into a single tender to get a better deal, what has surprised watchers is that the number of choppers required by the Army has gone up to 259 from the original requirement of 197. The Air Force too has put up a requirement of 125 helicopters.

In December 2007, a $600 million contract to procure 197 helicopters for the Army was cancelled on the recommendation of the Central Vigilance Committee after major anomalies in the selection process.

Significantly, the DAC has mandated a 50 per cent offset obligation for the winning contender of the mega chopper deal. This means that the company that bags this deal will need to spend 50 per cent of the contracted price in the Indian Defence manufacturing sector.

While the Defence Procurement Policy (DPP) dictates a minimum 30 per cent offsets for major defence deals, this is the second time that the Defence Ministry has put the obligation as 50 per cent. A similar condition of 50 per cent offsets has also been mandated for the estimated $10 billion deal to acquire 126 medium multi role fighters for the Air Force. Under the terms of the tender, 197 choppers will have to be delivered in a flyaway condition by the winner to meet Army’s urgent need of light helicopters to maintain troops posted in extreme altitudes like the Siachen glacier.

Other than the light observation helicopters deal, India is set to float tenders for several more helicopters in the medium to heavy lift role, besides attack choppers.