Cabinet Committee on Security chaired by Prime Minister Manmohan Singh on Monday, the nod to the deal with the Indian Air Force aircraft and equipment (IAF) Indo-Asian News Service reported.
The clearance came six months after U.S. President Barack Obama visited India and two months after Boeing and Lockheed Martin were knocked out in bidding for a 10.4 billion U.S. dollar deal for 126 combat jets for the IAF.
The U.S. Congress had approved the sale of the fully loaded aircraft for 5.8 billion U.S. dollars under the Foreign Military Sales government-to-government route last June.
However, the key to India yet to ink an agreement with the U.S. military, the aircraft may be without some key communications equipment.
India has not signed the Communications Interoperability and Security Memorandum of Agreement (CISMoA), followed by high-tech military equipment to friendly countries, the United States an agreement by law.
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