India Concludes Mega Defence Deals in 2010

By admin • January 5th, 2011

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India Defence Online, New Delhi — India is going full throttle as far as defence procurements are concerned in the current fiscal year. After having finalised the $30 billion fifth-generation fighter aircraft (FGFA) project in collaboration with Russia, India is also accelerating its fast-track purchases through the foreign military sales (FMS) route with the US and other countries.

Among the other major defence deals besides the FGFA project is the $10 billion purchase of 126 medium multi-role combat aircraft (MMRCA) which is being pursued by bidding from a host of international aviation majors. Another major deal which will supersede the cost of the MMRCA deal is the $11 billion follow on order of six new-generation submarines for the Indian Navy.

The Indo-US defence interaction and military trade had reached a major high in 2010 with various FMS deals as well as a string of joint exercises. Several defence acquisitions through the FMS route that are close to being finalised include the purchase of 145 ultra-light howitzers for about $647 million and Javelin anti-tank guided missiles worth $900 million. The total contract value of US systems bought under the FMS deal runs into several billion dollars since India has been acquiring major US equipment and weaponry. The major acquisition include the $2.21 billion purchase of eight Boeing P-8I maritime reconnaissance aircraft, the $962 million deal for six C-130J Hercules transport aircraft for IAF and the $88 million for USS Trenton and accompanying helicopters for the Indian Navy.

Despite India opting for competitive bidding in defence dealings, it has realised that acquisitions through the FMS route have fared much better than competitive bids and tendering processes. Many experts feel that not only is the tendering process of military requirements prone to delays and scams, it is fundamentally flawed since the requirements are decided by people with less technical erudition.

Besides, a fast track purchase works in the favour of the Armed forces and the government since it will bypass all the possibilities of corruption and red-tapism.

The need to speed up acquisition of vital weapon systems was given another thrust by the Indian government last year. In 2010, Finance Minister Pranab Mukherjee proposed that the Defence Minister be empowered to approve military hardware purchases up to $111.1 million.

At present, the limit for the Defence Minister is set at $22.2 million. It was also suggested that capital acquisitions only above $222.2 million be brought to the Cabinet Committee on Security (CCS) for approval.

As per the KPMG report, India has earmarked $32 billion for defence spending in the fiscal year ending March of which $13 billion is to pay for the acquisition of new weapons systems and related services.

Source: Indian Defence Online


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