India’s defense contracts with foreign vendors witnessed an eight-fold jump in the last three years despite the government’s bold initiatives aimed at reducing import dependency in the sector.
New Delhi (Sputnik) — The Indian defense ministry signed 23 contracts with foreign vendors worth $12.1 billion during the last financial year that ended on March 2017. The figure was $4.3 billion in 2015-16 and $1.69 billion in 2014-15. A total of 61 contracts have been signed with foreign vendors in last three years.
"The foreign vendors are mainly from USA, Russia, Israel, UK, Germany, France and Sweden. Capital procurement of defense equipment is based on threat perceptions, operational challenges and technological changes and to keep the armed forces in a state of readiness to meet the entire spectrum of security challenges," Subhash Bhamre, India’s Minister of State for Defense said in Parliament.
Equipments purchased from foreign venders during the last three years included aircraft, helicopters, rockets, missiles, artillery gun, frigates, simulators and ammunition.
Indian defense ministry has also accorded Acceptance of Necessity (AoNs) or in principle approval to 145 proposals worth $60 billion. Out of this, 103 proposals worth $37 billion have been approved under the rules wherein equipment will be manufactured in India.
"The value of AoNs accorded under various ‘Buy in India’ or ‘Make in India’ categories is important but the real challenge will be to convert these AoNs into contracts," Amit Cowshish, former financial advisor to Indian defense ministry told Sputnik.
Meanwhile, India’s defense forces procured equipments worth $6.2 billion from domestic vendors in 2016-17, 60.5% of total procurement value in comparison to 47% of total procurement value in 2013-14. However, experts say that the figures are not indicative of a decreasing trend in import dependence and that it may take quite a while for India to essentially realize its ambitious program of ‘Make in India’ in defense. The program aims to not only reduce dependence on imports but also to strike strategic partnerships to boost arms exports to emerging markets.
"What these figures show is an increase in the payments made to the Indian companies in the recent years which could also be partly on account of fewer numbers of foreign contracts finalized in the preceding years. While it may be possible to raise this level to 65 or 70 per cent, it may not be correct to say that these figures indicate a decreasing trend in reliance on imports or technology," Amit Cowshish, former financial advisor to Indian defense ministry says.
Prime Minister Modi has vowed to reverse India's dependence on imports by building a local manufacturing industry. The government is forecast to spend $250 billion on modernisation of its armed forces over the next decade.
This story first appeared on Sputnik & is reposted here with permission.