In the world of multibillion dollar defense contracts, India stands out.
Home to one of the biggest armed forces on the planet, the country has an uneasy co-existence with neighbors Pakistan and China. Its rapidly aging fighter jets make it a lucrative potential prize for the likes of Lockheed Martin Corp. and Boeing Co. While India wants to upgrade its fleet, there’s one big road block: New Delhi’s famed red tape.
The country – the world’s biggest arms importer, with an annual defense budget of USD43 billion – has been dangling a potential $15 billion fighter jet deal for more than a decade, with Lockheed and Boeing, the world’s two largest contractors, vying for the chance to refit India’s air force.
Although drawn-out negotiations aren’t uncommon in the arms world, India took 32 years to seal a deal with the U.S. to buy 145 howitzers from BAE Systems Plc, with arcane procurement rules and shifting specifications contributing to the lengthy delays.
In a country with a long history of corruption allegations – a scandal involving Bofors AB guns in the 1980s brought down a government and delayed the subsequent howitzer deal that was eventually hammered out last year – bureaucrats have turned extra cautious to avoid misdeeds, adding layers of vetting for negotiated contracts.
A wary India, which is hosting its flagship air show this week, has also derailed plans by Lockheed and Boeing to breathe new life into their aging F-16 and F/A-18 programs. India is still seeking to replace its Soviet-era MiG aircraft, while countries such as Japan and South Korea have acquired modern stealth fighters such as Lockheed’s F-35.
“The Indian Air Force is facing a critical shortage of combat assets and other equipment,” said Caron Natasha Tauro, an analyst at Jane’s by IHS Markit. “With a two-front threat in its north from Pakistan and China, this shortage is perceived to be an immediate threat to national security.”
About a third of India’s 650-strong fleet is more than 40 years old and set to be phased out over the next decade. The IAF has estimated it needs at least 45 squadrons to repel a joint attack from Pakistan and China, compared with a current active strength of about 25. The need is immediate. MDT/Bloomberg
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