The deal, which is expected to be signed either before or during Indian Prime Minister Narendra Modi’s visit to Washington, DC later this month, will give the Indian airline access to the highly sought-after F414 GE engine, according to two people familiar with the deal. who requested anonymity to discuss previously unpublicized details.
The people said the engines would be used in fighter jets for India.
Earlier this week, US Defense Secretary Lloyd Austin visited India and discussed the jet engine deal with Indian officials, sources told CNBC.
The nature of the deal – whether it will be labeled a partnership, joint venture or co-assembly – remains to be seen. Two Indian startups are also part of the venture, sources said.
GE declined to comment.
A partnership of this kind would require a technology transfer and thus congressional approval to move forward. Once the US State Department formally notifies congressional committees on Capitol Hill of the GE partnership, a 30-day approval period for the deal will begin, experts say.
Representatives for the State Department and the Indian government did not immediately return requests for comment. The Pentagon declined to comment.
“We know that advanced technology sharing is what India wants from the US to show that it is in this relationship for the long term,” said Richard Rossow, chair of US-India policy studies at the Center for Strategic and International Studies.
For years, India has relied on Russia for its defense needs, but Indian defense officials have engaged in a series of meetings with Washington in recent years to also acquire American equipment.
“What the Indians want is co-production. They want to develop and manufacture this equipment in India — not just be a foreign buyer,” said Daniel Silverberg, Capstone’s chief executive and a former national security adviser.
The potential deal with GE comes at a time when India’s economy has grown exponentially and attracted more interest from corporate giants such as Apple, Google and Amazon. In May, Apple CEO Tim Cook traveled to India and met Modi as the iPhone maker opened its first two major retail stores in the country.
The emerging market is also increasingly seen as a way to balance China’s dominance in wider Asia.
“One of the policy goals of the US administration is to strengthen the capacity of the Indian military to play a key role in counter-China efforts,” Silverberg said.
GE Aerospace has been strengthening its presence in India for four decades, using joint ventures to gain market share.
“We’re definitely seeing a lot of activity building up in India,” GE CEO Larry Culp told CNBC in late April, weeks after Air India placed a massive order for more than 800 GE LEAP engines.