News / Asia

Russia, France, US Eye Indian Defense Contracts

Indian Prime Minister Manmohan Singh meets Indian Air Force commanders at the start of the annual combined commanders conference of the armed forces in New Delhi, 13 Sep 2010
Indian Prime Minister Manmohan Singh meets Indian Air Force commanders at the start of the annual combined commanders conference of the armed forces in New Delhi, 13 Sep 2010

In the next two months, India will host the presidents of the United States, France and Russia. On the sidelines of the visits will be deals and discussions on arms contracts worth billions of dollars.  

All three presidential visits to New Delhi - those of U.S. President Obama, French President Nicolas Sarkozy and Russian President Dmitri Medvedev - are expected to see some lobbying for lucrative defense contracts which India will hand out in the coming years.

The high-profile visits come at a time when India's defense sector is overhauling its military hardware.  Rahul Bedi at Jane's Defense Weekly in New Delhi says the scale of the purchases will be massive.    

"Over the next two years or three years, India has allocated over $30 billion for weapon procurement and modernization of its military, and this figure is likely to go up to about 80 or 90 billion by 2021 or 2022," said Bedi.

President Obama's early November visit is expected to emphasize a growing strategic relationship between the two countries.

With defense ties on the upswing, India - which once mainly relied on Russian military hardware - is buying military equipment from the United States.  Since 2002, these purchases have added up to some $10 billion.

Negotiations are also underway for the largest ever deal between the two countries - the purchase of 10 Boeing military transport planes for $ 5.8 billion.

But India's reluctance to sign three pacts which are required under U.S. domestic law for transfer of sensitive defense technology is proving to be a hurdle in sales of high-tech weaponry, according to Rahul Bedi of Jane's Defense Weekly.

"India is a little hesitant because it believes these pacts are very intrusive and they are likely to be looked at very negatively by other Indian [government] allies and other partners, but that precludes the transfer of high technology," said Bedi.    

Negotiations are underway between the two countries to ease restrictions for sale of high-tech weapons.

Political observers say the challenge for the United States is not just to win arms contracts in India, but to upgrade its military relationship with India.  Improving defense ties is a priority for both countries.  India is wary of Beijing's growing military strength.  Washington sees India as a counterweight to a rising China.

French President Nicolas Sarkozy will also be eyeing potential defense deals, when he visits New Delhi in early December. Talks are underway on a $2 billion deal for the modernization of Mirage jets.

The Russian president's visit, in late December, will witness the signing of India's largest military contract to date - an agreement worth $30 billion to co-produce stealth-technology fighter jets.

All three countries are also in the race to win one of the most sought after contracts which India is to hand out:  an $11 billion deal for 126 fighter jets.  Among the six companies vying for the deal are Boeing and Lockheed Martin from the United States, Dassault from France and Russia's MiG-35.


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