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This Year's Defexpo Focusing on Domestic Indian Firms

Feb. 5, 2014 - 03:45AM   |  
An Indian woman sits inside a simulator
An Indian woman sits inside a simulator at the Rafael pavilion at Defexpo in New Delhi in 2012. This year's exposition will focus more heavily on homegrown weaponry. (Manan Vatsyayana/AFP via Getty Images)
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NEW DELHI — Defexpo 2014, the eighth biannual exhibition showcasing land, naval and homeland security systems beginning here Thursday through Sunday, will focus on indigenous capabilities in line with new government procurement rules that favor homegrown weapons.

Finmeccanica and its group of companies, including AgustaWestland, which is reeling from allegations of corruption from a 2010 helicopter deal, is not allowed to participate in the exhibition. Another 15 companies are on the debarred list.

Defexpo 2014 will host 624 companies as exhibitors — 368 foreign and 256 domestic — displaying their products to tap India’s US $150 billion defense market in the next seven to 10 years.

“[The] focus of Defexpo 2014 is displaying defense manufacturing capabilities,” said Gokul Chandra Pati, Indian defense production secretary. Talking to reporters on the eve of the exhibition, Pati said the highlight of Defexpo is participation of medium, small and micro defense companies from home and abroad.

India, which purchases nearly 70 percent of its defense needs through imports, buys spares worth more than $2 billion each year and has faced problems of getting spares at reasonable prices, especially from Russia, said an Indian Defence Ministry official. The MoD now has a policy requiring overseas vendors to provide a list of their sub-vendors so India can purchase spares and subsystems directly, without having to get the consent of the original equipment manufacturer.

The largest domestic participation will be the Defence Research and Development Organisation, followed by the $97 billion-worth private sector Tata group of companies.

Russia will be the largest exhibitor with 37 companies, followed by France with 24 and Israel with 20. Nine ministerial delegations and 133 delegations from 36 countries will attend Defexpo.

Pati said that in this financial year, which stretches from last April to March 31 of this year, defense orders worth $6.6 billion have been awarded to public sector defense companies and state-owned Ordnance Factories Board.

Defexpo 2014 opens against the backdrop of a falling Indian rupee against the US dollar over the past two years, eroding the purchase capacity of India by more than $3 billion. In addition, a rising current account and fiscal deficit has delayed several defense projects in the past year.

For the 2013-14 financial year, $33.95 billion was allocated for defense spending, of which $14.45 billion was earmarked for buying fresh equipment and weapons. This year, India’s defense minister diverted $1.311 billion from the Capital Head of the budget, meant to buy fresh weaponry and equipment, to the Revenue Head, which is largely used to pay for salaries, pensions and other day-to-day equipment of Indian troops, an MoD source said.

The MoD has emphasized domestic defense companies in its dealings. In the past year alone, it has issued nearly $7 billion worth of requests for information and requests for proposals from the domestic industry. This includes such high tech projects as the medium range surface-to-air missile and long range surface-to-air missile systems for the Indian Air Force.

The defense sector was opened to investments by the private sector, including foreign direct investments with a limit of 26 percent. However, no major original equipment manufacturers has tied up with domestic private sector companies to produce high tech weaponry. ■


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