Indias Defense Procurement Bungles

POLITICS | PREVIEW | SECURITY | SOUTH ASIA

| INDIA October 25, 201 3 By James Hardy

Bureaucratic m ism anagem ent is depriv ing Indian soldiers of m uchneeded weapons.

Image credit:REUTERS/Ajay Verma

In February I wrote a piece for The Diplomat noting that India was, to use that old bromide, at a crossroads on its road to armed forces modernization. I argued that, despite mind-numbing bureaucracy and a misfiring indigenous defense industry , India was buy ing its way towards establishing a well-supplied fighting force at land, air and sea. Ev ents since then hav e conspired to challenge that rosy assessment of military procurement on the subcontinent. A combination of corruption allegations and Ministry of Defence mismanagement are conspiring to foul up what should be relativ ely straightforward deals. First up in this list of shame is the MoDs failure to sign off on a deal to buy 1 45 M7 7 7 lightweight howitzers from BAE Sy stems. The contract, which was routed through Washingtons gov ernment-to-gov ernment Foreign Military Sales (FMS) program, should hav e been signed off y ears ago. Instead, the Indian MoD missed a October 1 5 deadline that BAE had imposed because the company could not afford to keep the guns U.K. production line open while it waited for Delhi to sign on the dotted line. The delay s means that if the Indian Army wants the M7 7 7 which by all accounts it does then itll hav e to pay at least an ex tra $50 million to reopen the line. Nex t up is the omnishambles ov er the 1 2 AgustaWestland AW1 01 V V IP helicopters that India was supposed to be getting this y ear. Three had been deliv ered when a corruption scandal ex ploded around the contract, with two company ex ecutiv es arrested in Italy and a former Indian air chief marshal accused of taking bribes by Indian inv estigators. While all inv olv ed deny any wrongdoing, the MoD suspended pay ments with nine helicopters still to be deliv ered. The case dev eloped further this month when AgustaWestland filed for arbitration in an attempt to force the MoD to unblock its pay ments and get the contract back on track. This may hav e backfired, howev er, with MoD officials apparently incandescent at the company for filing the arbitration claim when the defense minister was in hospital and only day s after the ministry s top air procurement official had died. The fallout from the AgustaWestland case can also be seen in the serv ices procurement plans. In April the MoD delay ed the army s plans to spend 1 50 billion rupee ($2.3 billion) on Rafael Spike non-line-of-sight anti-tank missiles because of sensitiv ities at sole-sourcing such a big contract. It is also impeding recent attempts by the U.S. to kick start the military -industrial relationship with Delhi. The Pentagon in the form of outgoing Deputy Defense Secretary Ashton Carter has promised to codev elop at least two sy stems with India: a successor to the Jav elin anti-tank guided missile and the nex t-

generation EMALS catapult for launching aircraft off carriers. The chances of either of these joint dev elopments getting off the ground are sev erely compromised by Indias inability to sort out its basic procurement relationships with foreign v endors, as the U.S.-India Business Council (USIBC) noted in a September letter to the Pentagon that was prov ided to IHS Janes. The USIBC letter complained that India was imposing "unfeasible delay s" on signing defense contracts and that foreign defense companies had little post-deliv ery liability protection. It pointed to the M7 7 7 deal as a key ex ample of the problems being faced. Meanwhile, the Indian MoDs largest ev er foreign procurement the MMRCA deal to buy 1 26 Dassault Rafale fighters has been kicked into the long grass by alleged disagreements ov er the responsibility for quality control on license-built aircraft and the ongoing depreciation of the rupee, which has pushed the price up just as Indias economy has slowed. This chain of ev ents may not elicit the most sy mpathetic response from the neutral observ er. Its hard to get too upset at the sight of a U.S. business lobby complaining at foreign defense regulations, while the consequences of Indias economic slowdown and currency issues are not just being felt by the defense industry . But on a strategic lev el, Indias almost masochistic ability to snarl up foreign defense procurement alongside the institutional hurdles to successful indigenous production could hav e more serious side effects than just obv ious reputational damage. The Indian Army s ambitious Field Artillery Rationalisation was established in 1 999 and env isaged the $5-7 billion procurement of 3,000-3,200 assorted caliber howitzers by 2027 . None of these acquisitions hav e been completed. Major General Sheru Thapliy al (rtd), a former artillery officer, warned IHS Janes in June that the army could face a situation where it has no effectiv e long-range howitzers unlike its neighbors. And ev en where it does hav e guns in serv ice, such as the 1 05 mm Indian Field Gun and its deriv ativ es, their 1 7 km range is well below the contact env elope of China and Pakistans more modern guns. At sev eral points along the Pakistani and Chinese frontiers the range achiev ed by these guns barely crosses India's borders, rendering them ineffectual, a three-star artillery officer told IHS Jane's. In this light the significance of the M7 7 7 deal is thrown into sharp focus. The M7 7 7 , which can be slung beneath the CH-47 Chinooks that India is also buy ing from the U.S., is supposed to equip two mountain div isions that are being stood up to counter Chinas strategic mov es on the Line of Actual Control. With no artillery , these div isions are little more than paper units. It isnt all doom and gloom for Indias armed forces, and the army in particular. South African prime contractor Denel is set to be remov ed from a blacklist after an inv estigation into alleged bribery was closed without resolution, and a number of local priv ate firms hav e established joint v entures with international companies to build some of the gun ty pes that India desperately needs. But giv en whats happened in the past, the ongoing possibility of corruption and the ongoing possibility of anti-corruption inv estigations will probably stop arms sales from being finalized. Indias soldiers are still not getting the weapons they need. Without fundamental reform to the Indian MoD and how it buy s arms, that is unlikely to change soon. James Hardy is the Asia-Pacific Editor of IHS Jane's Defence Weekly . The opinions expressed are those of the author and do not necessarily represent the view s of IHS.

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