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Report: India Clears Defense Procurement Worth $3.5B

Jul. 20, 2014 - 11:11AM   |  
India Prime Minister Narendra Modi. (Evaristo Sa / Getty Images)
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NEW DELHI — India’s new Hindu nationalist government cleared Saturday proposals worth nearly $3.5 billion to modernize the nation’s aging Soviet-era military hardware and boost its domestic defense industry, a report said.

The move underscored the desire of the government led by Prime Minister Narendra Modi to move quickly to update the country’s military as India looks to defend itself against an increasingly assertive China and from rival Pakistan.

The government earlier this month announced a 12 percent rise in military spending in the annual budget as part of efforts to overhaul its armed forces, declaring “there can be no compromise” with defense.

The defense Acquisition Council on Saturday approved defense procurement proposals worth 210 billion rupees ($3.48 billion), many of which were longstanding, at a meeting chaired by defense Minister Arun Jaitley, the Press Trust of India said.

“There are many proposals in the pipeline for the defense forces,” Jaitley said at the first council’s first meeting since the Bharatiya Janata Party government took office in May after scoring a landslide election victory.

“Today, we have tried to expedite quite a few of them,” Jaitley, who is also the finance minister, was quoted by the PTI as saying.

Defense ministry officials were not immediately available for comment.

India is one of the world’s biggest arms importers, traditionally relying on Russia and in more recent years the United States for equipment and technology due to weaknesses with its own industry.

But slow procurement over decades and the collapse of a string of defense deals during the previous center-left Congress party government’s rule has left the military short of key equipment.

The BJP has been pushing for greater indigenisation of the military industry as India imports around 70 percent of its defense hardware.

Among the major proposals to receive approval was a 90-billion-rupee tender to provide five fleet support ships for the navy that would be open to all public and private sector shipyards, PTI said citing defense ministry officials.

In his first budget, Jaitley hiked defense spending for the current financial year to 2.29 trillion rupees ($38.3 billion). He also said he would further open up the military industry to foreign investment, lifting the cap to 49 percent from 26 percent, with Indian companies retaining overall control.

But defense analysts said the new limit would fail to lure foreign firms because it was less than 50 percent and they feared losing rights to sensitive technology.

Western nations are wooing India’s government in hopes of clinching multi-billion arms deals while New Delhi is keen to leverage their eagerness to do business to win technology transfers.

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