Indian Arms Buy Push Leaves $1B Unspent

By vivek raghuvanshi

NEW DELHI - Despite efforts to speed up arms programs and finalize large purchases, the Indian Defence Ministry will return $1 billion that it was unable to use as planned in the fiscal year that ends March 31.

Ministry officials, fearing criticism from the military and political leaders, tried to speed procurement ahead of this year's general elections. In 2008, bids worth about $9 billion were floated, some of which resulted from cancellation of earlier bids. Most had been pending for two to three years due to delays.

"The process of acquisition had slowed down over the last three to four years," said S.V. Thapaliyal, a retired Indian Army major general. "Now there is a political compulsion to show results in view of forthcoming elections. Although a number of requests for proposals [RfPs] have been issued, the acquisition process is so slow and complicated that most of the acquisitions will only materialize in two to three years' time."

"Procurement of the required weapon systems is only a small part of the defense planning process - the whole process is flawed in execution," said Gurmeet Kanwal, retired Indian Army brigadier and director of the Centre for Land Warfare Studies, here. "Bureaucratic red tape must be eliminated through empowered committees, rather than according to a case-by-case approval on files that bounce back and forth endlessly. Prolonged trials are another chokepoint; a system of accountability should be instituted to ensure that trials are completed on time."
Other defense analysts said that the pile-up of RfPs began long ago.

"The cumulative pile is not just over the past three to four years, but goes back at least two decades," said independent defense analyst Rahul Bhonsle, a retired Indian Army brigadier. "The ideal acquisition schedule projects requirements at least 15 to 20 years in advance. That is the aim of having long-term integrated plans. But for the past few years, not having bought any weapons worth the name, the government is now rushing, driven by a post-Mumbai paranoia."
Swaran Singh, professor for diplomacy and disarmament at Jawaharlal Nehru University here, said the sudden big numbers of RfPs are due to a recent sharp surge of economic activity.
"Since the late 1990s, the Indian economy has had impressive growth rates, enabling the UPA government to prioritize weapon purchases, which appears like a sudden burst of RfPs floated in recent years," he said.

India plans to buy more than $30 billion in arms over the next five years to fight the low-intensity war in the northern state of Jammu and Kashmir, head off terror attacks in cities, and prepare for potential battle with Pakistan or China.

Program Status

In the near term, there is some hope for fast-track purchases of smaller items, including fast interceptor craft, hovercrafts and patrol boats for the Coast Guard. The government also will finalize major deals in the next two to three months, a senior Defence Ministry official said.
India expects within two to three months to sign its largest deal ever with Israel, a $3 billion-plus joint effort to develop a medium-range, surface-to-air missile, sources said.

The big-ticket bids floated in 2008 include $2 billion for 100 tracked howitzers, 48 ultra-light howitzers and 185 wheeled howitzers. The Army also sought to procure armored fighting vehicle protection and countermeasure systems worth $270 million, and floated a tender for the joint development of a laser-based directed infrared countermeasure system. The Army's quest for quick-reaction, surface-to-air missiles for $1.4 billion received a poor response; overseas vendors asked for requirements changes.

Other major tenders included a $2 billion bid from the Navy and Coast Guard for maritime patrol aircraft, a $750 million global bid to buy 197 reconnaissance and surveillance helicopters, and a $2 billion effort to upgrade Mirage fighters.

A $1 billion deal to replace the Russian-made Shilka air defense system has drawn no bidders, though Russia has offered licensed production of the Shilka system as a separate arrangement. India also may cancel a bid to procure 266 general guidance munitions in the 1,000-kilogram class compatible with Mirage-2000H/TH aircraft, because the Defence Research and Development Organization claims it can manufacture the munitions itself, Defence Ministry sources said.

The Defence Ministry canceled a bid to purchase a successor to the Swedish-made L-70 air defense guns because only the state-owned Ordnance Factories Board, in partnership with Rheinmetall Defense of Germany, had submitted the bid. The $1.2 billion contract to buy transportable radars is also heading for cancellation as Rafael was the only bidder.
E-mail: vraghuvanshi@defensenews.com.

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