Arms race: India approves defence procurements worth $3.5 bn, says report

Indian government earlier this month announced a 12 per cent rise in military spending in the annual budget.

Afp July 19, 2014

NEW DELHI: India's new government on Saturday cleared proposals worth nearly $3.5 billion in a desperate bid modernise the nation's ageing Soviet-era military hardware and boost its fledgling domestic defence 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 traditional rivals Pakistan and an increasing scepter of terrorism in the region.

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

The Defence Acquisition Council on Saturday approved defence procurement proposals worth INR210 billion ($3.48 billion), many of which were longstanding, at a meeting chaired by Defence Minister Arun Jaitley, the Press Trust of India said.

"There are many proposals in the pipeline for the defence 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.

Defence 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 and Europe for equipment and technology due to weaknesses with its own industry.

But slow procurement over decades and the collapse of a string of defence deals during the previous centre-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 per cent of its defence hardware.

Among the major proposals to receive approval was an INR90-billion tender to provide five fleet support ships for its burgeoning yet disaster-prone navy that would be open to all public and private sector shipyards, PTI said citing defence ministry officials.

In his first budget, Jaitley hiked defence spending for the current financial year to INR2.29 trillion ($38.3 billion). He also said he would further open up the military industry to foreign investment, lifting the cap to 49 per cent from 26 per cent, with Indian companies retaining overall control.

But defence analysts said the new limit would fail to lure foreign firms because it was less than 50 per cent 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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