Etienne FONTAINE - Global arms makers gathered in New Delhi for India’s biggest defence show face further frustrating delays as they await a new Indian government which they hope can speed up procurement.
Big French, British, Russian, US and other arms groups at Defexpo, which runs until Sunday, are competing to offer their wares to India, the largest global importer of conventional weapons.
The country, with regional rival Pakistan to the west and growing China to the north, is in the midst of a stuttering $100-billion defence modernisation programme to replace Soviet-era planes and tanks.
But hopes New Delhi might sign any big deals at the show were dashed Thursday by Defence Minister AK Antony, who said on the sidelines of India’s Defexpo that “there is no money left” in the defence budget for this year. “Almost all the budget has been spent. Many other projects are also in the pipeline,” he said.
Speaking on the sidelines of the four-day event at which over 600 companies are exhibiting, he added that firms would have to wait until a new government takes office after elections due by May.
His left-leaning Congress party, in power since 2004, is headed for a resounding defeat according to polls, with a new coalition led by the Hindu nationalist Bharatiya Janata Party forecast to take its place.
But the next government will also face spending constraints, with economic growth faltering and the country running a large fiscal deficit at a time when investors are pressuring emerging market currencies.
A long backlog
Among the major contracts on hold is a $12-billion deal for 126 Rafale fighter jets which has been under exclusive negotiation by France’s Dassault Aviation since January 2012.
Successive deadlines to complete one of the world’s biggest defence contracts - including one for the end of this financial year in March - have slipped by.
Under the proposed deal, New Delhi would buy outright 18 fighters manufactured in France and then make the rest under licence in India. European missile maker MBDA is another waiting to complete the sale of up to 2,000 short-range surface-to-air missiles.
The contract was announced during a visit by French President Francois Hollande to India in February 2013 but the deal still needs final approval by the Indian government. Head of the group in India, Loïc Piedevache, told AFP he was still hopeful of signing the contract “in the coming months”.
The missiles are due to be produced by the Indian industrial group Bharat Dynamics Ltd (BDL) but the European firm would still get a substantive share of the contract. Another deal on the anvil is for 197 reconnaissance helicopters for which Eurocopter, now known as Airbus Helicopters, and the Russian group Kamov have been competing since 2009. “The need is there,” said Olivier Lambert, senior vice president in charge of global Airbus Helicopters sales.
The helicopters are intended to replace the Indian army’s decades-old Cheetah and Chetak choppers, while new artillery procurement has long been another priority for the generals.
Experts and military planners agree that acquiring new equipment is a priority for India. The army “has not been able to induct artillery since the last was purchased in 1980s”, says Laxman Kumar Behera, analyst at the Institute for Defence Studies and Analyses (IDSA ).
The land army has “deficiency in basic requirements such as bullet proof jackets, night vision devices, assault rifles”, Behera told AFP. India’s defence ministry has long been demanding that the armed forces wean themselves off their dependence on foreign equipment, but the local industry remains weak.
India still imports 70 percent of its military equipment despite the country’s insistence that foreign manufacturers tie up with local partners and transfer technology. “India’s ambitions to be a self-reliant defence producer remains, but much soul searching needs to be done in order to make this ambition a reality,” said Deba R. Mohanty, head of research firm Indicia.
Corruption cases, logjams in the decision-making chain and a lack of local research and development have also slowed the modernisation of the armed forces.
India cancelled last month a 556-million-euro ($753-million) contract with Anglo-Italian firm AgustaWestland to buy luxury helicopters for VIPs amid bribery allegations.
Industry insiders say that fear of being accused of corruption - which has scuppered numerous contracts in the past - has led many civil servants to sit on files and delay making decisions.
“Indian defence procurement process is such a complex administrative web that the process gets stuck in its own complexities,” Mohanty told AFP.–AFP