The $50 Billion Shopping Spree

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After a long break, foreign arms purchases are firmly back on New Delhi’s agenda. But given the new trends dictating the country’s defence needs, indigenous R&D needs to buck up

It should not deter us that Wikileaks has failed so far to enliven Delhi’s parlour debate on what America makes of India’s military heft (or lack thereof). Apart from a stray mention of the lethargy with which India arms itself, there is nothing in the latest leaks to talk about. What should excite interest, however, are the hard facts that are India’s own—specifically, the $50 billion that New Delhi has lined up for defence purchases over this decade. It is a staggering sum of money, and could conceivably give Indian defence forces a bigger bang for the buck than it has obtained of late.


So, what is on the shopping list? The big ticket items include spending Rs 42,000 crore on 124 next-generation fighter aircraft for the Indian Air Force, Rs 20,000 crore on six Scorpene submarines, and an additional Rs 12,000 crore on three submarines to be bought off the shelf and three more to be built in India. Plus, Rs 5,000 crore for 300 odd attack helicopters for the Air Force and Army, Rs 4,800 crore for C-130 airlift aircraft and Rs 8,000 crore for 10 strategic heavy lift aircraft. There are howitzers and the like as well.

Deployed well, all this firepower could reshape the way India defends itself in the foreseeable future. “The new hardware being acquired is partly because India has now more money to do so and partly because the mandate of its armed forces is being transformed,” according to Sunil Dasgupta, non-resident fellow at Brookings Institution, a US think-tank, and co-author of Arming Without Aiming, a new book on India’s arms acquisition strategy, “India’s hardware acquisition will have to come from a proper identification of threats, and then [India must adapt] the weapons to changes in threat perception.”

Changes, of course, are ongoing. In fact, there are four main trends that are shaping India’s armoury.

Himalayan Threats

The Indian defence budget has long been dominated by the Army. However, over the next decade the Air Force will emerge as a key strategic force. This is a critical change. The manpower-heavy Army can prove pivotal on the ground, but a nuclear strike capability involves air delivery—with back-up aircraft. This explains the 124 new fighter aircraft and opening of half a dozen air bases along the Himalayas, from Arunachal to Ladakh. The Air Force has already deployed new Su-30MKI aircraft in the western theatre, but more firepower is needed.

The long Chinese border is expected to come increasingly into focus. On the ground, the Army is raising two new mountain divisions and a mountain brigade. That’s 40,000 extra soldiers. It is partly to assist this force that the new C-130s and C-17 heavy lift aircraft will be employed.  Ultra-light FH-177 howitzers will also be for high-altitude use.

The Shift to American Arms

From artillery-locating radars and long-range P8I spy aircraft for the Navy, to the 124 new fighters and heavy-lift planes, suddenly the US looms large on India’s purchase list (though there are five other suppliers vying for the fighter deal). This is a clear break from the past, when Russia accounted for at least 70 per cent of India’s hardware supplies. American equipment is costlier upfront even if it takes less money to maintain, but India has weightier issues to ponder right now.

The US, for a start, is not making it easy for India with its insistence on intrusive inspection regimes and zest for live-wire information synchrony. Even US President Obama’s recent visit could not overcome this hurdle. India is resisting two arrangements proposed by the US. The first of these is the Communications Interoperability and Security Memorandum of Agreement (CISMOA); and the second is the Basic Exchange and Cooperation Agreement (BECA) for geo-spatial cooperation. These are sticking points, as they effectively force India and the US into a closer alliance.

“The US has a reliability problem in India. The perception is that the US could be difficult in the long run where supply of weapons is concerned,” as Dasgupta sums up, “On the other hand, India wants a strategic relationship with the US that emphasises common values. The defence deals will be an important component of such an overall relationship.”

The Offset Clause

India’s new defence purchase policy, due in early 2011, is expected to formalise the so-called defence offset clause in arms purchase deals. Designed to nurture a domestic arms industry, it stipulates that contracts worth at least 30 per cent of any deal’s value be awarded back to Indian suppliers of parts, software and so on. The Tata Group already has some joint ventures with foreign firms to develop relevant equipment, and the Mahindra Group is in the field as well.

According to a report by Research and Markets, a consultancy, the offset clause opens up a market worth more than $14 billion over the next decade. Software supplies alone could yield about $2 billion a year in export earnings for Indian companies straightaway.

“The offset clause will allow Indian firms, especially in the private sector, to play a bigger role in the defence business,” says Anit Mukherjee of Institute for Defence Studies and Analyses (IDSA), an Indian think-tank, “However, for an indigenous capability in arms, the real way forward is to make the public sector more competitive and accountable, without which we will remain an arms importer for a long time to come.”

Joint Development

Increasingly, international partnerships will play a role in the way India arms itself. On the joint development of weapon systems, India is well on its way with three mega projects. The first aims to develop a fifth-generation fighter bomber jointly with Russia (a test flight was conducted in January 2010), which is expected to signal a leap in technical sophistication. The second is BrahMos, a supersonic cruise missile developed by DRDO jointly with Russia. The third is an effort with Israel to develop next-generation anti-aircraft missiles.


Foreign purchases often have their own problems. Remember the celebration two years ago that greeted the Navy’s acquisition of an amphibious troop carrier, USS Trenton, from the US? The rickety old ship (first commissioned in 1970) was touted as the Navy’s second-largest vessel, renamed INS Jalashwa. But just a few months into its deployment, it sprouted a hydrogen sulphide gas leak during an exercise in the Bay of Bengal, killing five sailors on the spot.
Money, evidently, is not all one needs to transform a military force. One needs a coherent strategy to make the most of the weapons at one’s disposal. The induction of foreign military hardware, for example, requires a proper timeframe within which integration must take place—with enough to fill the gaps in the interim. And this has to be done within the context of a clear purpose in the form of a military doctrine, which places each weapon system in one or many simulated theatres of war, as it were, in relation to specific threats.

On all these counts, India appears to be falling short. “The higher defence organisational set-up in India continues to exhibit serious weaknesses in its ability to prosecute wars in the contemporary strategic context,” says Harsh V Pant of the Centre for War Studies at London’s King’s College. In other words, even as India faces stiffer threats than ever before, its defence readiness has seen a dramatic decline. “Doctrinal evolution in my opinion is more important,” notes Pant, “India’s ‘Cold Start’ doctrine is an attempt to fight limited wars, under the nuclear shadow, with two enemies at the same time. The political establishment remains coy about accepting it, even starting a debate on it. But without some kind of doctrinal evolution, India, for all its acquisitions, will remain a second-rate military power.”

All the action, for now, seems to be focused on extra metal. “There is a whole range of requirements that are needed to augment India’s defence preparedness on an immediate basis,” says a senior Defence Ministry official, “The Air Force has a sanctioned strength of 39 squadrons, but currently has only 33, nearly half of which are antiquated MiG-21s and MiG-27s. The Army has not added a single howitzer gun since 1986, when Bofors guns were purchased, and needs 1,400 such pieces. The Navy’s submarine fleet has been reduced to only half a dozen subs that can be in service at any time. There are also big gaps in radars, small arms and attack helicopters, as well as heavy lift capabilities.”

Be it ammunition or aircraft, submarines or helicopters, field guns or hand guns, the message from New Delhi to the world is clear: India has no technology of its own to make such weapons. Bluntly speaking, this is a severe indictment of the Defence Research and Development Organisation (DRDO), which can count being taken off a US blacklist as its biggest solo achievement, edging out Leh Berry, a high-altitude fruit pulp that it has to show for its multi-crore R&D efforts, something that has not exactly sent shivers down enemy spines.

The reason that DRDO has been a washout is a peculiar conflict-of-interest it has been saddled with. The boss of DRDO is also the chief scientific advisor to the Prime Minister—not only is he in charge of developing weapons, he also has the job of evaluating the same. In any other country, this would be a scandal. But in India, it is a budget booster for an overseas shopping spree.

The country’s sudden rush to acquire expensive weapons has another reason: making up for lost time. Under Defence Minister AK Antony’s watch, a kind of procurement paralysis had set in, with defence insiders joking that the Centre’s grand defence strategy was to defend his hard-won reputation for integrity. In the interests of transparency in defence deals, he banned middlemen.

Then reality struck; defence deals globally almost always involve intermediaries. So the Defence Minister did the next best thing. If he could not control graft, he could ensure there was no space for it—easily done by okaying no decision on any defence deal.

Another delay factor, some surmise, has been on account of the Indian Government’s new offset policy, which has been many years in the making; in this view, local companies needed time to get their act together.

And time has been running out. India’s 2010-11 defence budget is $31 billion. Even after accounting for routine expenses (salaries and so forth), there is plenty for capital expenditure on arms. Yet, so far, the latter part has gone unspent. This is how it has been for several years. Between 2000 and 2007, for example, an estimate says that the Ministry of Defence returned about $5 billion of unspent funds to the exchequer. Of any other ministry, such thrift would be admirable. But the world is a tough place, and the threats that India faces do not make any allowances for military modesty.

No wonder India is suddenly set to become the world’s biggest importer of arms, as noted by Sipri, the Stockholm-based research institute that tracks arms sales. India imports a huge 70 per cent of its weapons. It’s possible to justify this in terms of trade theory: export what you’re good at, import what they’re good at. But in the world of geopolitics, that’s a naïve way to analyse the scenario. Defence dependency, in fact, is the measure to watch. And had it not been for India’s nuclear cover, India’s overall dependency would have risen sharply. In terms of conventional warfare (under the ‘Cold Start’ doctrine), it certainly has.

Indigenous R&D could change that. Once private ventures acquire technical expertise, expect a series of new breakthroughs. Co-development beats off-the-shelf purchases. One gains not just defence independence, but also a set of patents and spin-offs that can be useful in other sectors such as software (the US experience validates this point). In the end, that is what counts, not the billions lined up to buy weapons.