Dwindling arms sales put India, Russia military partnership in rough patch

By Rajeev Sharma Source:Global Times Published: 2013-7-29 20:13:01

India is buying howitzers again. This had not happened in 27 years since the Bofors gun deal in which then prime minister Rajiv Gandhi and other political leaders were accused of taking kickbacks from Bofors AB to help the firm secure a howitzer supply contract. Now that India has restarted its purchases, it is turning to various countries as well as domestic arms manufacturers to help meet its demand. This has left its long-term arms supplier, Russia, somewhat out in the cold.

There is a full mandate from both New Delhi and Moscow to smoothen out the rough edges but somehow this is not happening. Interestingly, their cooperation in the defense sector is central to mutual Indo-Russian discomfort, though each side has its own reasons for this unease.

From the Indian perspective, the Russians are no longer the tried, tested and trusted defense suppliers they used to be years ago. There are many reasons for this. Russian weapons, though comparatively cheaper than Western ones, are not found to be very reliable.

Moreover, the Russians are repeatedly and consistently unable to meet deadlines for the supply of promised defense goods.

India is no longer taken in by cheap Russian weaponry that proves to be more costly in the long run because of high inaccuracy as well as maintenance and fuel issues. India has long moved past a buyer-seller mode with Russia, and rightly insists on an equal stakeholder basis to its defense partnership.

India can now afford to buy more sophisticated weaponry from elsewhere, and has started doing precisely that for the last couple of years.

This is the main red line from the Russian point of view. The Russians have lost several back-to-back big-ticket defense contracts in past years. This has happened with stunning regularity since India drastically changed its Defense Procurement Policy (DPP) which lays more stress on global tenders and transparency in the competition process.

Though the Russians are livid, they still continue to hold the top position in the Indian defense sector.

The Indian defense inventory still comprises predominantly of made-in-Russia weapon systems and, in fact, more than 60 percent of the Indian armory is Russian. India still accounts for about 25 percent of Russian total arms sales revenue.

In 2011, for example, India spent $3.3 billion on Russian weapon systems. But these figures will inevitably change drastically when the 2013-14 statistics are made available.

The latest modifications in the DPP, announced by the Indian government on June 1, threaten to rock the Russian boat further as they place focus on self-reliance and indigenization with reduced scope for buying arms from abroad.

The governments in New Delhi and Moscow are deeply aware of this snowballing problem and are committed to finding solutions to their mutual problems in the defense arena.

The Indian government can address Russian concerns in two ways: by encouraging Russian companies to forge partnerships with Indian companies - private as well as state-owned; and by devising government-to-government routes for defense contracts with Russia.

The first one is feasible as India has liberalized its defense sector and opened it up to private firms. As a result, more and more Indian companies are getting into the arms manufacturing business and entering into partnerships with foreign companies to obtain key technologies.

India has already started work on the second point, and earlier this month permitted a conditional hike of foreign direct investment in the defense sector from 26 percent to 49 percent.

This policy change would enable the Indian government to decide in favor of a friendly country while deciding on imports of weapon systems which cannot be made in India.

The upcoming Indian contract for howitzer guns, expected to be worth around $350 million, will serve as a test case for the future Indo-Russian defense relationship.

The author is a New Delhi-based columnist and a strategic analyst. bhootnath004@yahoo.com

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