India to review arms purchase policy

India to review arms purchase policy
Indian Finance and Defence Minister Arun Jaitley arrives at the office of Indian Prime Minister Narendra Modi to attend the first cabinet meeting in New Delhi on May 29, 2014.

NEW DELHI - India's defence ministry says it will review the practice of blacklisting arms companies simply on allegations of wrongdoing, in the first sign of a departure from the policies of the previous government.

"A new government has come with a fresh mind and as a fresh chapter for India's policy," said Minister of State for Defence Rao Inderjit Singh, in a report in The Indian Express newspaper last Friday.

"If a person or a company has been found guilty, (it) should be punished as strongly as possible. But before guilt is established, if a contract is cancelled, it is unfair. A review is needed."

During his seven years in office, former defence minister A.K. Antony, a politician with a squeaky clean image, took a cautious approach. He probed every allegation of misconduct during negotiations with companies and blacklisted a host of them. This led to inordinate delays in a number of key acquisitions, which are seen to have hurt the modernisation of the military. The army, for instance, is still using howitzers that are 30 years old. India blacklisted six armament firms for 10 years in 2012 for their alleged role in a 2009 weapons bribery scandal. These included Singapore company ST Kinetics, a front runner for the ultra-light-howitzer contract, over a corruption scandal involving a top Indian defence official. ST Kinetics denied the allegations. Experts said that a review is much needed.

"In the end, the loser was the army because we didn't get the systems... The army (for instance) needed a gun weapons system," said Mr K. Mehra, a retired major-general.

Expectations are high that the new government will also make a quick decision on buying fighter jets, helicopters, artillery guns and other weaponry needed to modernise the country's armed forces.

Defence Minister Arun Jaitley, who is temporarily in charge of the ministry, has promised to speed up the procurement of defence equipment.

India is the only Asian power to have two aircraft carriers in its naval fleet, but it still uses worn-out equipment.

Retired general V.K. Singh, currently a minister, revealed in a letter to the Prime Minister's Office in 2012, when he was army chief, that the army's tank fleet did not have the ammunition it needed to defend the country, that its air defences were 97 per cent obsolete, that the infantry lacked night fighting capabilities, and even the elite Special Forces were "woefully short of essential weapons".

Dr P.K. Ghosh, a retired naval officer and senior fellow at the Delhi-based think-tank Observer Research Foundation, said: "We have been slipping very badly and have fallen back on our modernisation plan very seriously. Unless there is a political push, acquisitions cannot be speeded up.

"It is not that there was no movement (in the previous government. It was pretty tardy. Nobody wanted to take any decision, given the fact that there was a chance you could be hauled up later. All this contributed."

The biggest decision for the new administration will be whether to go ahead with an order for 126 Rafale fighter jets from France's Dassault Aviation, estimated to cost at least US$10 billion (S$12.5 billion).

Two years ago, the aviation firm was shortlisted for the purchase of 126 Medium Multi-Role Combat Aircraft (MMRCA). But negotiations have stretched and the Indian air force is yet to acquire any of them.

"The Congress government left a number of major acquisitions in limbo when it left office," said Mr James Hardy, Asia-Pacific editor at IHS Jane's Defence Weekly.

Said Mr Hardy: "The biggest is the MMRCA deal, which is supposed to cost about US$10 billion but due to price rises and inflation could now hit US$20 billion."

"Modi has to decide whether to go ahead with this, renegotiate the deal or restart the whole contest. Either way, it's a big call."

From a defence capability perspective, nearly all of the issues facing India relate to conventional weapons and armed forces modernisation. But expectations are already high in the defence industry.

In a press statement, Mr John Brosnan, managing director of BAE Systems, said: "We are also optimistic that the government will provide fresh impetus to the needs of the armed forces, particularly for modern artillery."

This article was first published on June 1, 2014.
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