JanjaWeed
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New Delhi buys over 70 per cent of its arms requirements from the international market
With media spotlight focused firmly on Indias looming lok sabha (lower house) elections to be held in 2014, news that the country has emerged as the worlds largest importer of major conventional weapons worldwide has largely gone unnoticed.
According to data released by Stockholm International Peace Research Institute (SIPRI), Indias arms imports the largest in the world are also a whopping 109 per cent higher than even Chinas, the worlds second largest economy and a mighty arms importer itself.
Surely theres nothing to be proud of in the fact that New Delhi imports more arms than Beijing? Or that it buys over 70 per cent of its arms requirements from the international bazaar, generating just 30 cent indigenously? Besides, theres a crucial difference between the two Asian giants modus operandi while India exports no arms, China does and is also a prolific arms manufacturer.
The ramifications of the deficit of an indigenous arms industry have been serious for India. It has led to multi-million dollars defence contracts filling the coffers of other countries while allowing plenty of room for bribery and corruption to take place at home.
The excessive reliance on foreign arms firms, say defence analysts, is also the key to why arms dealers and sleazy arms consultants are thronging the corridors of South Block. It is disconcerting also to note that despite India being the worlds largest arms importer (having spent well over $50 billion to acquire arms over the last decade), the nation does not boast of a single authorised agent of a foreign armament company on the defence ministrys rolls.
Given the high stakes involved in defence deals, some say a lobby is deliberately not letting such an indigenous industry develop for fear that it will curtail opportunities for kickbacks. This is highly plausible given Indias otherwise robust manufacturing industry.
Analysts say the corruption scandals plaguing the Indian military establishment can be largely blamed on powerful middlemen play in the procurement process. Wherever big bucks are involved, such dubious characters will exist, opines a home ministry secretary. One has to evolve a system where they can operate legitimately within a system of checks and balances. Why has the defence ministry not been able to register them as official agents for companies? questions the official.
Defence deal bribes, add insiders, normally amount to about 10 per cent of the total contract value, with a lions share going to politicians. Middle-men normally get around three per cent with bureaucrats and officers from the Army, Navy and the IAF sharing the rest of the spoils.
When the multi-billion dollar Augusta-Westland helicopter deal burst forth last month, with the arrest of former Italian defence and aerospace company Finmeccanicas Chief
Operating Officer Giuseppe Orsi, all defence minister AK Antony could do was wring his hands in despair. Orsi had allegedly paid a 51 million-Euro kickback to secure a $755-million contract for selling 12 VVIP helicopters to India. Orsi has also denied wrongdoing while New Delhi is still mulling over whether scrap the contract signed in 2010 or not!
Obstructing aggressive arms indigenisation further in India, say analysts, are the defence public sector units (DPSUs), ordnance factory board (OFB) and the Defence Research and Development Organisation (DRDO). The trios monopoly in the field, and the powerful influence of arms agents over government officials, has long been Indias undoing. These groups are directly or indirectly promoting Indias heavy dependence on foreign suppliers while bottlenecking the efforts of private players to venture into either arms manufacture or defense procurement.
With many Indian private sector players like the Tata conglomerate, L&T, the Mahindra group and Reliance having proven manufacturing prowess, why cant the Indian government can encourage such private enterprise to take up arms manufacturing?
Reliance Industries Limited is already committed to invest about $500 million to $1 billion in developing an aerospace centre. Surely, a bit of nudging and pushing can alter the dynamics of the Indian arms procurement industry in favor of the country.
It is also time the government came up with a new clear-cut mechanism to legitimise and regulate defence agents. Taped conversations of the alleged middle-men in the deal,
Guido Haschke, Carlo Gerosa and Christian Michel, who routed the money to India and the Tyagi brothers, show them boasting about how they had hoodwinked the Indian system. Worse, the Finmeccanica scandal comes at a time when India is on the verge of finalising a contract with Dassault Aviation S.A. of France to purchase 126 Rafale fighter jets in a deal estimated at over $10 billion. The acquisition of the Rafale jets is part of an Indian Air Force plan to buy 400 planes and helicopters until 2022.
A recent report titled The Indian Defence Market 2012-2022 finds that Indias robust growth in military spending will continue through the next decade as the government seeks to fulfill its ambitious defense modernisation plans. It estimates that the government plans to spend about $ 50 billion over the next five years to upgrade its military.
Besides the Rafale deal, the Indian army is also in the process of acquiring new tanks, artillery guns, missile batteries and machine guns in a major revamp bid while the navy is upgrading its fleet with new frigates and submarines.
But the Finmeccanica scandal will likely decelerate such procurements. The slowdown in defence purchases will likely annoy the armed forces which have been urging the government to increase defense spending to modernise the countrys antediluvian armed forces as neighbors China and Pakistan spend millions upgrading their military capabilities.
A slowdown in defence purchases will also impact aerospace and defence companies worldwide who are betting on Indias plans to spend tens of billions of dollars each year to buy new military equipment. Already, last year, Indias defence budget for the ending March 31 was slashed due to sclerotic economic growth. (GDP growth projections for 2013 have been recalibrated to 5.4 per cent by the government after an earlier projection of around 6 per cent late last year.) The absence of strong deterrents, and a deficit of a healthy ecosystem which encourages corruption-free defence deals, is what has made India such a flourishing market for arms dealers. If New Delhi doesnt check corruption in arms purchases, it will continue to provide ample opportunities to unscrupulous middlemen to continue to exploit governmental loopholes and make illegitimate money in future defense deals while compromising national interest. The time to act is now.
Why does not India possess an indigenous arms industry?
Simple answer... you can not make multi- millions of $s in kickback if you have your own defence industry!
With media spotlight focused firmly on Indias looming lok sabha (lower house) elections to be held in 2014, news that the country has emerged as the worlds largest importer of major conventional weapons worldwide has largely gone unnoticed.
According to data released by Stockholm International Peace Research Institute (SIPRI), Indias arms imports the largest in the world are also a whopping 109 per cent higher than even Chinas, the worlds second largest economy and a mighty arms importer itself.
Surely theres nothing to be proud of in the fact that New Delhi imports more arms than Beijing? Or that it buys over 70 per cent of its arms requirements from the international bazaar, generating just 30 cent indigenously? Besides, theres a crucial difference between the two Asian giants modus operandi while India exports no arms, China does and is also a prolific arms manufacturer.
The ramifications of the deficit of an indigenous arms industry have been serious for India. It has led to multi-million dollars defence contracts filling the coffers of other countries while allowing plenty of room for bribery and corruption to take place at home.
The excessive reliance on foreign arms firms, say defence analysts, is also the key to why arms dealers and sleazy arms consultants are thronging the corridors of South Block. It is disconcerting also to note that despite India being the worlds largest arms importer (having spent well over $50 billion to acquire arms over the last decade), the nation does not boast of a single authorised agent of a foreign armament company on the defence ministrys rolls.
Given the high stakes involved in defence deals, some say a lobby is deliberately not letting such an indigenous industry develop for fear that it will curtail opportunities for kickbacks. This is highly plausible given Indias otherwise robust manufacturing industry.
Analysts say the corruption scandals plaguing the Indian military establishment can be largely blamed on powerful middlemen play in the procurement process. Wherever big bucks are involved, such dubious characters will exist, opines a home ministry secretary. One has to evolve a system where they can operate legitimately within a system of checks and balances. Why has the defence ministry not been able to register them as official agents for companies? questions the official.
Defence deal bribes, add insiders, normally amount to about 10 per cent of the total contract value, with a lions share going to politicians. Middle-men normally get around three per cent with bureaucrats and officers from the Army, Navy and the IAF sharing the rest of the spoils.
When the multi-billion dollar Augusta-Westland helicopter deal burst forth last month, with the arrest of former Italian defence and aerospace company Finmeccanicas Chief
Operating Officer Giuseppe Orsi, all defence minister AK Antony could do was wring his hands in despair. Orsi had allegedly paid a 51 million-Euro kickback to secure a $755-million contract for selling 12 VVIP helicopters to India. Orsi has also denied wrongdoing while New Delhi is still mulling over whether scrap the contract signed in 2010 or not!
Obstructing aggressive arms indigenisation further in India, say analysts, are the defence public sector units (DPSUs), ordnance factory board (OFB) and the Defence Research and Development Organisation (DRDO). The trios monopoly in the field, and the powerful influence of arms agents over government officials, has long been Indias undoing. These groups are directly or indirectly promoting Indias heavy dependence on foreign suppliers while bottlenecking the efforts of private players to venture into either arms manufacture or defense procurement.
With many Indian private sector players like the Tata conglomerate, L&T, the Mahindra group and Reliance having proven manufacturing prowess, why cant the Indian government can encourage such private enterprise to take up arms manufacturing?
Reliance Industries Limited is already committed to invest about $500 million to $1 billion in developing an aerospace centre. Surely, a bit of nudging and pushing can alter the dynamics of the Indian arms procurement industry in favor of the country.
It is also time the government came up with a new clear-cut mechanism to legitimise and regulate defence agents. Taped conversations of the alleged middle-men in the deal,
Guido Haschke, Carlo Gerosa and Christian Michel, who routed the money to India and the Tyagi brothers, show them boasting about how they had hoodwinked the Indian system. Worse, the Finmeccanica scandal comes at a time when India is on the verge of finalising a contract with Dassault Aviation S.A. of France to purchase 126 Rafale fighter jets in a deal estimated at over $10 billion. The acquisition of the Rafale jets is part of an Indian Air Force plan to buy 400 planes and helicopters until 2022.
A recent report titled The Indian Defence Market 2012-2022 finds that Indias robust growth in military spending will continue through the next decade as the government seeks to fulfill its ambitious defense modernisation plans. It estimates that the government plans to spend about $ 50 billion over the next five years to upgrade its military.
Besides the Rafale deal, the Indian army is also in the process of acquiring new tanks, artillery guns, missile batteries and machine guns in a major revamp bid while the navy is upgrading its fleet with new frigates and submarines.
But the Finmeccanica scandal will likely decelerate such procurements. The slowdown in defence purchases will likely annoy the armed forces which have been urging the government to increase defense spending to modernise the countrys antediluvian armed forces as neighbors China and Pakistan spend millions upgrading their military capabilities.
A slowdown in defence purchases will also impact aerospace and defence companies worldwide who are betting on Indias plans to spend tens of billions of dollars each year to buy new military equipment. Already, last year, Indias defence budget for the ending March 31 was slashed due to sclerotic economic growth. (GDP growth projections for 2013 have been recalibrated to 5.4 per cent by the government after an earlier projection of around 6 per cent late last year.) The absence of strong deterrents, and a deficit of a healthy ecosystem which encourages corruption-free defence deals, is what has made India such a flourishing market for arms dealers. If New Delhi doesnt check corruption in arms purchases, it will continue to provide ample opportunities to unscrupulous middlemen to continue to exploit governmental loopholes and make illegitimate money in future defense deals while compromising national interest. The time to act is now.
Why does not India possess an indigenous arms industry?
Simple answer... you can not make multi- millions of $s in kickback if you have your own defence industry!
