India’s Defense Procurement Bungles

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India’s Defense Procurement Bungles

Bureaucratic mismanagement is depriving Indian soldiers of much-needed weapons.

India’s Defense Procurement Bungles
Credit: REUTERS/Ajay Verma

In February I wrote a piece for The Diplomat noting that India was, to use that old bromide, “at a crossroads” on its road to armed forces modernization.

I argued that, despite mind-numbing bureaucracy and a misfiring indigenous defense industry, India was buying its way towards establishing a well-supplied fighting force at land, air and sea.

Events since then have conspired to challenge that rosy assessment of military procurement on the subcontinent. A combination of corruption allegations and Ministry of Defence mismanagement are conspiring to foul up what should be relatively straightforward deals.

First up in this list of shame is the MoD’s failure to sign off on a deal to buy 145 M777 lightweight howitzers from BAE Systems. The contract, which was routed through Washington’s government-to-government Foreign Military Sales (FMS) program, should have been signed off years ago. Instead, the Indian MoD missed a October 15 deadline that BAE had imposed because the company could not afford to keep the gun’s U.K. production line open while it waited for Delhi to sign on the dotted line.

The delays means that if the Indian Army wants the M777 – which by all accounts it does – then it’ll have to pay at least an extra $50 million to reopen the line.

Next up is the omnishambles over the 12 AgustaWestland AW101 VVIP helicopters that India was supposed to be getting this year. Three had been delivered when a corruption scandal exploded around the contract, with two company executives arrested in Italy and a former Indian air chief marshal accused of taking bribes by Indian investigators. While all involved deny any wrongdoing, the MoD suspended payments with nine helicopters still to be delivered.

The case developed further this month when AgustaWestland filed for arbitration in an attempt to force the MoD to unblock its payments and get the contract back on track. This may have backfired, however, with MoD officials apparently incandescent at the company for filing the arbitration claim when the defense minister was in hospital and only days after the ministry’s top air procurement official had died.

The fallout from the AgustaWestland case can also be seen in the services’ procurement plans. In April the MoD delayed the army’s plans to spend 150 billion rupee ($2.3 billion) on Rafael Spike non-line-of-sight anti-tank missiles because of sensitivities at sole-sourcing such a big contract.

It is also impeding recent attempts by the U.S. to kick start the military-industrial relationship with Delhi. The Pentagon – in the form of outgoing Deputy Defense Secretary Ashton Carter – has promised to co-develop at least two systems with India: a successor to the Javelin anti-tank guided missile and the next-generation EMALS catapult for launching aircraft off carriers.

The chances of either of these joint developments getting off the ground are severely compromised by India’s inability to sort out its basic procurement relationships with foreign vendors, as the U.S.-India Business Council (USIBC) noted in a September letter to the Pentagon that was provided to IHS Jane’s.

The USIBC letter complained that India was imposing "unfeasible delays" on signing defense contracts and that foreign defense companies had little post-delivery liability protection. It pointed to the M777 deal as a key example of the problems being faced.

Meanwhile, the Indian MoD’s largest ever foreign procurement – the MMRCA deal to buy 126 Dassault Rafale fighters – has been kicked into the long grass by alleged disagreements over the responsibility for quality control on license-built aircraft and the ongoing depreciation of the rupee, which has pushed the price up just as India’s economy has slowed.

This chain of events may not elicit the most sympathetic response from the neutral observer. It’s hard to get too upset at the sight of a U.S. business lobby complaining at foreign defense regulations, while the consequences of India’s economic slowdown and currency issues are not just being felt by the defense industry.

But on a strategic level, India’s almost masochistic ability to snarl up foreign defense procurement – alongside the institutional hurdles to successful indigenous production – could have more serious side effects than just obvious reputational damage.

The Indian Army’s ambitious Field Artillery Rationalisation was established in 1999 and envisaged the $5-7 billion procurement of 3,000-3,200 assorted caliber howitzers by 2027. None of these acquisitions have been completed.

Major General Sheru Thapliyal (rtd), a former artillery officer, warned IHS Jane’s in June that the army could face a situation where it has no effective long-range howitzers – unlike its neighbors. And even where it does have guns in service, such as the 105 mm Indian Field Gun and its derivatives, their 17 km range is well below the contact envelope of China and Pakistan’s more modern guns.

“At several points along the Pakistani and Chinese frontiers the range achieved by these guns barely crosses India's borders, rendering them ineffectual,” a three-star artillery officer told IHS Jane's.

In this light the significance of the M777 deal is thrown into sharp focus. The M777, which can be slung beneath the CH-47 Chinooks that India is also buying from the U.S., is supposed to equip two mountain divisions that are being stood up to counter China’s strategic moves on the Line of Actual Control. With no artillery, these divisions are little more than paper units.

It isn’t all doom and gloom for India’s armed forces, and the army in particular. South African prime contractor Denel is set to be removed from a blacklist after an investigation into alleged bribery was closed without resolution, and a number of local private firms have established joint ventures with international companies to build some of the gun types that India desperately needs.

But given what’s happened in the past, the ongoing possibility of corruption – and the ongoing possibility of anti-corruption investigations – will probably stop arms sales from being finalized. India’s soldiers are still not getting the weapons they need. Without fundamental reform to the Indian MoD and how it buys arms, that is unlikely to change soon.

James Hardy is the Asia-Pacific Editor of IHS Jane's Defence Weekly. The opinions expressed are those of the author and do not necessarily represent the views of IHS.