India and Japan are likely to conclude the long-pending negotiations entailing purchase of amphibious aircraft for $1.6 billion required by the Indian Navy for search and rescue operations.

The deal will be announced during the annual summit meeting between Prime Minister Narendra Modi and Shinzo Abe here on Saturday. Under the multi-billion dollar deal, Japan will supply a fleet of ShinMaywa US-2 amphibious aircraft to India. A total of 15 such aircraft will be purchased. This is will become the first such big-ticket defence deal between India and Japan, if the talks that started in 2011 are concluded. This will also make India the first such country to buy military hardware from Japan as they lift a self-imposed restriction on defence exports. ShinMaywa, which intends to set up a unit here later, is also scouting for Indian partners and have been in talks with HAL, Tata Aerospace, Mahindra and L&T among others.

Modi is extremely keen to wrap up this first-ever big-ticket defence deal with Japan even as both sides aim at elevating the bilateral relationship to ‘Special Strategic and Global Partnership’, a senior official told BusinessLine .

However, main attraction of the visit is going to be the announcement of $14 billion bullet train project, which will be set up between Mumbai and Ahmedabad. The modalities on the financing part of the bullet train project will be worked out subsequently. Apparently, Japan has already assured India granting concessional loans for the project.

The bullet train project forms part of the $35 billion that Japan plans to invest in India over the next five years.

Modi is also expected to take up the issue of rising trade deficit with Japan under the Comprehensive Economic Partnership Agreement (CEPA).

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