The $1.3-billion India-Japan defence deal to procure 12 US-2i ShinMaywa amphibious search-and-rescue (SAR) aircraft for the Indian Navy has again hit the roadblock over the pricing issue.

The deal was expected to be finalised during the Japanese Defence Minister General Nakatani three-day visit to India starting on Thursday. But it seems to have got stuck over the issue of pricing as the Ministry of Defence finds its hands tied with a narrow budget and senior officials of the Indian Navy are believed to have opposed to the deal, sources told BusinessLine .

The deal, talks for which has been going on since 2011, almost reached a conclusion when Prime Minister Narendra Modi visited Japan in 2014 and announced that India will buy the aircraft off the shelf. This was further strengthened with the visit by Japanese Prime Minister Shinzo Abe to India in December 2015.

“Talks are underway ... We have to analyse its usefulness and benefits before we can sign the deal,” said an official of the Ministry of Defence on condition of anonymity. According to the joint statement issued after the meeting between Minister Nakatani and Defence Minister Manohar Parrikar: “The Ministers commended the effort made by both countries regarding the cooperation on US-2 amphibious aircraft which was launched in 2013.”

South China Sea During the meeting the issue of South China Sea was also widely discussed.

“The Ministers recognised that the security and stability of the seas connecting the Indian and Pacific Oceans are indispensable for the peace and prosperity of the India-Pacific region. The Ministers expressed concern over recent developments in this regard. In this context, they noted the Award of the Arbitral Tribunal on the South China Sea under the UNCLOS on 12 July 2016, and urged all parties to show utmost respect for the UNCLOS,” the joint statement said.

The statement comes two days after China rebuffed the verdict of an international court which said Chinese occupation of some of the islands in South China Sea was illegal.