The Telegraph
Wednesday , November 14 , 2012
Since 1st March, 1999
CIMA Gallary

Spend squeeze puts defence buys in limbo

New Delhi, Nov. 13: As India’s defence establishment braces for another tight spending season, its armed forces have been asked by minister A.K. Antony to buy only what is necessary.

But as their planners set about the task, even preliminary stocktaking discloses that nearly every major acquisition of military hardware in the past 10 years has either been delayed by red tape or cancelled because of corruption charges or re-negotiated for escalations resulting in losses that run into billions of unaccounted-for dollars.

There is only one major platform that has been delivered to the Indian Armed Forces in time: the C-130J Super Hercules aircraft for special forces made by Lockheed Martin and contracted under the Pentagon’s Foreign Military Sales (FMS) programme.

India contracted six of the aircraft for about $1 billion in 2008 and last year decided to buy six more under an option clause in the agreement. The aircraft are without some of the equipment that the Air Force would have liked because India did not sign the “foundational” defence agreements, but at least the first six are here, parked and operating from Hindon, the airbase just east of Delhi.

The squeeze on expenditure could mean that Antony’s ministry will now defer the biggest contract — for 126 medium multi-role combat aircraft — to the next fiscal. The contract could be upwards of $12 billion. An oversight team has been appointed by the minister to keep tabs on the contract negotiation.

The French Rafale was selected for exclusive negotiations on February 1 this year. In the nine months since, the talks with Dassault Aviation, the aircraft-maker, have been continuing. The Rafale was selected over the Eurofighter Typhoon. Air Chief Marshal N.A.K. Browne and Indian ambassador to France Rakesh Sood expected the contract to be done by February 2013 but defence ministry officials say that is “an ambitious timeframe”.

The costliest delay on a single purchase has been for the navy. Russia told India in September that the aircraft carrier Admiral Gorshkov, to be re-christened the INS Vikramaditya, was initially contracted in January 2004 for $ 947 million. It was to be delivered in 2009 after retrofitment.

Russian defence minister Serdyukov (since replaced) told Antony in September that the 45,000-tonne carrier can now be handed over to the Indian Navy only in October next year because of problems in its boilers. This happens more than two years after the contract was renegotiated in 2010 and the cost was more-than-doubled to about $2.9 billion.

The navy took delivery of the INS Tarkash, a stealth frigate, in Russia this week. The Tarkash is part of the second line of Talwar-class frigates. It, too, was delayed by more than a year. It was originally slated to be received by the Indian Navy in October 2011.

The funds crunch that Antony has hinted at will also impact on the proposed purchases of heavy lift and attack helicopters. The Boeing-made Chinook and Apache are understood to have been selected but they have not been contracted yet.

Among other tasks, the twin-rotor Chinook was selected for being able to carry the M777 Ultra Light Howitzers made by BAe Land Systems, US. The howitzers were contracted for about $660 million (about Rs 3,000 crore) in the middle of this year. Meant chiefly for the army’s mountain divisions on the China frontier, they are to be delivered from 2015. They would be the first heavy artillery to be bought for the army since 1987 when the Bofors were inducted. The Indian army’s field artillery modernisation programme has been languishing for more than 10 years.

The one delivery programme that the defence establishment says is on schedule is the contract for 12 VVIP Agusta Westland 101 helicopters. Authorities in Naples, Italy, are investigating the contract as part of a wider probe amid suspicion that middlemen were used by the company. Antony has also asked for more information from Rome. The first of the helicopters, contracted for euros 560 million, (roughly Rs 325 crore each), is scheduled for delivery in December.