News / Asia

    Eyes on Defense Deals, Western Powers Rush to Court India's Modi

    India's Prime Minister Narendra Modi (C) walks to speak with the media as he arrives to attend his first Parliament session in New Delhi, June 4, 2014.
    India's Prime Minister Narendra Modi (C) walks to speak with the media as he arrives to attend his first Parliament session in New Delhi, June 4, 2014.
    Reuters

    Western governments are rushing to visit India's new Prime Minister Narendra Modi, drawn by the prospect of multi-billion-dollar deals as the government prepares to open the nascent defense industry to foreign investment.

    Senior politicians from France, the United States and Britain arrive over the next few weeks as Modi prepares to accelerate the modernization of the country's mostly Soviet-era weaponry.

    Modi intends to build up India's military capabilities and gradually turn the world's largest arms importer into a heavyweight manufacturer - a goal that has eluded every prime minister since independence in 1947.

    On the table is a proposal circulated within the new government to raise caps on foreign investment - with one option to allow complete foreign ownership of some defense projects.

    "All the countries are trying to make their case, especially as there is the sense that the Indian market will undergo a shift," said Harsh Pant, professor of international relations at King's College London.

    "They get a sense from their dealings that something dramatic is going to happen and they want first-mover advantage," said Pant, who specializes in Indian defense.

    First to arrive in New Delhi will be French Foreign Minister Laurent Fabius, whose top priority is to close a stalled deal to sell India 126 Rafale fighter jets, built by Dassault Aviation, for an estimated $15 billion.

    Fabius, who arrives on Monday, will meet Modi as well as his most powerful minister, Arun Jaitley, who holds the twin portfolios of defense and finance - and can therefore decide both whether to sign the deal and when to release the money.

    U.S. Senator John McCain is also due in India next week.

    McCain, whose Arizona constituency includes weapons makers such as Boeing and Raytheon, told the Senate on Thursday that Washington should seek to bolster India's economic and military rise.

    "This is an area where U.S. defense capabilities, technologies, and cooperation - especially between our defense industries - can benefit India enormously," McCain said of India's drive to modernize the armed forces.

    UK still hopeful on fighter jet

    In July, Britain is likely to send in Foreign Secretary William Hague and finance minister George Osborne, a British government source said on Friday.

    Britain has drawn some cheer from the slow progress of the negotiations for the Rafale deal. The Eurofighter Typhoon was shortlisted along with the Dassault fighter before India announced the French jet was the winner.

    Cost escalations and disagreements about building the Rafale in partnership with India's state-run Hindustan Aeronautics Limited have complicated talks with France, and London has never entirely given up hope that it will return to the race.

    However, on Thursday, one source at the Indian Defense Ministry said the deal was likely to be finally closed during Fabius' visit and could be signed this year. A French Foreign Ministry source said talks were ongoing, but refused to provide more detail.

    Russia, for years India's top weapons supplier, pipped all three countries to the post, sending Deputy Prime Minister Dmitry Rogozin to visit the new government in Delhi two weeks ago. Washington last year replaced Moscow as India's top defense supplier, according to IHS Jane's.

    The Western nations will have noted that India's foreign minister expressed displeasure with Russia's recent offer to sell Mi-35 attack helicopters to India's arch-rival Pakistan.

    "I don't think it's a competition," U.S. Assistant Secretary of State Nisha Biswal said after an early post-election visit to New Delhi.

    "India will have strong and positive relationships with a variety of countries and that is to be encouraged," said Biswal. "We want to see India taking on a stronger and a leadership role in the region and around the world so we welcome that."

    $6 billion spree

    India spent some $6 billion last year on weapons imports. It makes few of its own weapons, beyond ballistic missiles and assembly lines for foreign jets.

    On Thursday, the government signaled it was in the mood for liberalization by allowing manufacturers to build more defense components without licenses, making it easier for Indian firms to partner foreigners.

    At present foreign companies can only invest 26 percent in Indian defense projects without committing to technology transfer, which has put off many investors.

    Before the election, sources in Modi's Bharatiya Janata Party said there was a plan to increase the cap to 49 percent.

    "For higher-tech intellectual property we would want to go over 50 percent to be in a position to share technology that we have significant investments in," said Phil Shaw, chief executive of Lockheed Martin India Pvt Ltd.

    "An uplift from 26 to 49 percent maintains the status quo and may not be sufficient incentive to make an investment here."

    Lockheed Martin already has a 26 percent investment in an Indian joint venture with Tata Advanced Systems that manufactures airframe components for the C-130J Super Hercules cargo lifter.

    India's Department of Industrial Policy and Promotion has circulated a discussion document that proposes allowing up to 100 percent foreign direct investment, or FDI, in defense production, two government officials told Reuters.

    The note suggested allowing 100 percent FDI in manufacturing of state-of-the art equipment, one of the officials said. It also recommends a cap of 49 percent for investments which do not involve transfer technology and a 74 percent ceiling in such cases where the foreign investor is ready to share technology know-how, the official added.

    Last week, Commerce and Industry Minister Nirmala Sitharaman said foreign investment in the sector would help increase defense preparedness of the country and reduce import dependence, saving billions of dollars in foreign exchange.

    However, she said the government was yet to take a final call on increasing the FDI ceiling and the decision would be taken by Jaitley and Modi. The proposals face pockets of resistance in Indian industry, Modi's party and the military establishment.

    A.K. Antony, who was India's longest serving defense minister until his Congress party's election defeat in May, said this week that allowing higher foreign investment in defense would be "suicidal."

    You May Like

    Saudi Arabia’s New Female Politicians in the Other Room 

    Many in Saudi Arabia say elected representatives should share unsegregated spaces; according to a recent survey, more than half the Saudi population, both men and women, prefer to work in a segregated place

    Russia Not ‘Apologetic’ for Syria Airstrikes

    With Moscow criticized for targeting armed opponents of President Assad, Russia’s UN envoy says his country ‘acting in a very transparent manner’

    Pakistan Warns of Islamic State's Growing Reach

    Aftab Sultan, General Director General of Intelligence Bureau (IB), briefed Senate Committee in closed hearing, saying that IS-linked groups have been expanding in Pakistan

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Russia's Car Sales Shrink Overall, But Luxury and Economy Models See Growthi
    X
    February 10, 2016 5:54 AM
    Car sales in Russia dropped by more than a third in 2015 because of the country's economic woes. But, at the extreme ends of the car market, luxury vehicles and some economy brands are actually experiencing growth. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Russia's Car Sales Shrink Overall, But Luxury and Economy Models See Growth

    Car sales in Russia dropped by more than a third in 2015 because of the country's economic woes. But, at the extreme ends of the car market, luxury vehicles and some economy brands are actually experiencing growth. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Civil Rights Pioneer Remembers Struggle for Voting Rights

    February is Black History Month in the United States. The annual, month-long national observance pays tribute to important people and events that shaped the history of African Americans. VOA's Chris Simkins reports how one man fought against discrimination to help millions of blacks obtain the right to vote
    Video

    Video Jordanian Theater Group Stages Anti-Terrorism Message

    The lure of the self-styled “Islamic State” has many parents worried about their children who may be susceptible to the organization’s online propaganda. Dozens of Muslim communities in the Middle East are fighting back -- giving young adults alternatives to violence. One group in Jordan is using dramatic expression a send a family message. Mideast Broadcasting Network correspondent Haider Al Abdali shared this report with VOA. It’s narrated by Bronwyn Benito
    Video

    Video Migrant Crisis Fuels Debate Over Britain’s Future in EU

    The migrant crisis in Europe is fueling the debate in Britain ahead of a referendum on staying in the European Union that may be held this year. Prime Minister David Cameron warns that leaving the EU could lead to thousands more migrants arriving in the country. Meanwhile, tension is rising in Calais, France, where thousands of migrants are living in squalid camps. VOA's Henry Ridgwell reports.
    Video

    Video Valentine's Day Stinks for Lebanese Clowns

    This weekend, on Valentine's Day in Lebanon, love is not the only thing in the air. More than half a year after the country's trash crisis began, the stink of uncollected garbage remains on the streets. Step forward "Clown Me In," a group of clowns who use their skills for activism. Before the most romantic day of the year the clowns have released their unusual take on love in Lebanon -- in a bid to keep the pressure up and get the trash off the streets. John Owens reports from Beirut.
    Video

    Video Families Flee Aleppo for Kurdish Regions in Syria

    Not all who flee the fighting in Aleppo are trying to cross the border into Turkey. A VOA reporter caught up with several families heading for Kurdish-held areas of northern Syria.
    Video

    Video Rocky Year Ahead for Nigeria Amid Oil Price Crash

    The global fall in the price of oil has rattled the economies of many petroleum exporters, and Africa’s oil king Nigeria is no exception. As Chris Stein reports from Lagos, analysts are predicting a rough year ahead for the continent’s top producer of crude.
    Video

    Video 'No Means No' Program Targets Sexual Violence in Kenya

    The organizers of an initiative to reduce and stop rape in the informal settlements around Kenya's capital say their program is having marked success. Girls are taking self-defense classes while the boys are learning how to protect the girls and respect them. Lenny Ruvaga reports from Nairobi.
    Video

    Video Chocolate Lovers Get a Sweet History Lesson

    Observed in many countries around the world, Valentine’s Day is sometimes celebrated with chocolate festivals. But at a festival near Washington, the visitors experience a bit more than a sugar rush. They go on a sweet journey through history. VOA’s June Soh takes us to the festival.
    Video

    Video 'Smart' Bandages Could Heal Wounds More Quickly

    Simple bandages are usually seen as the first line of attack in healing small to moderate wounds and burns. But scientists say new synthetic materials with embedded microsensors could turn bandages into a much more valuable tool for emergency physicians. VOA’s George Putic reports.
    Video

    Video Researchers Use 3-D Printer to Produce Transplantable Body Parts

    Human organ transplants have become fairly common around the world in the past few decades. Researchers at various universities are coordinating their efforts to find solutions -- including teams at the University of Pennsylvania and Rice University in Houston that are experimenting with a 3-D printer -- to make blood vessels and other structures for implant. As VOA’s Greg Flakus reports from Houston, they are also using these artificial body parts to seek ways of defeating cancerous tumors.
    Video

    Video Helping the Blind 'See' Great Art

    There are 285 million blind and visually impaired people in the world who are unable to enjoy visual art at a museum. One New York photographer is trying to fix this situation by making tangible copies of the world’s masterpieces. VOA correspondent Victoria Kupchinetsky was there as visually impaired people got a feel for great art. Joy Wagner narrates her report.
    Video

    Video German Artists to Memorialize Refugees With Life Jacket Exhibit

    Sold in every kind of shop in some Turkish port towns, life jackets have become a symbol of the refugee crisis that brought a million people to Europe in 2015.  On the shores of Lesbos, Greece, German artists collect discarded life jackets as they prepare an art installation they plan to display in Germany.  For VOA, Hamada Elrasam has this report from Lesbos, Greece.
    Video

    Video E-readers Help Ease Africa's Book Shortage

    Millions of people in Africa can't read, and there's a chronic shortage of books. A non-profit organization called Worldreader is trying to help change all that one e-reader at a time. VOA’s Deborah Block tells us about a girls' school in Nairobi, Kenya where Worldreader is making a difference.