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Politics

India's arms modernization hampered by populist budget

Handouts before poll weaken New Delhi's muscle-flexing against China and Pakistan

An Indian Navy Chetak helicopter, seen here in 2007. India needs to replace such helicopters for newer models.    ¬© Reuters

NEW DELHI -- India has been taking steps to modernize its military equipment, buying new helicopters and assault rifles, in part as deterrent to any threat from neighboring China and Pakistan, but its giveaways to win over voters are denting its defense budget.

India on Tuesday kicked off the process to acquire 111 naval utility helicopters, inviting expression of interest from local and foreign manufacturers. The Indian navy is in dire need of these choppers to replace the outdated French-designed Chetak helicopters produced by state-run defense company Hindustan Aeronautics. The new helicopters will be used in search and rescue, casualty evacuation, low-intensity maritime operations and torpedo drops.

The government plans to spend over 217 billion rupees ($3 billion) on the project. It was the first to be approved in August last year under the government's ambitious plans to form strategic partnerships with private companies to boost local industries and in this case, defense manufacturing. 

The project will help the defense industry acquire niche technologies and foster Prime Minister Narendra Modi's "Make in India" agenda. The naval choppers will be manufactured by an Indian company in collaboration with a foreign original equipment manufacturer and around 60% of its content should be locally made.

Foreign companies expected to bid for the project include Lockheed Martin, Airbus Helicopters and Bell Helicopters. Indian companies such as Tata Advanced Systems, Mahindra Defence, Adani Defence, L&T, Bharat Forge and Reliance Infrastructure, are also expected to throw their hats in.

India also signed a contract with U.S.-based company Sig Sauer to procure 72,400 assault rifles at a cost of about 7 billion rupees. This purchase has long been in the plans but has only just come to fruition and the batch is expected to be delivered within a year.

The first batch of four Chinook heavy lift helicopters -- seen here at an air show in Berlin in April 2018 -- for the Indian Air Force delivered on Feb. 10.   © Reuters

India has been jolted into action in the face of a two-pronged threat from China and Pakistan. The two are close allies -- Beijing has been assisting Islamabad in modernizing its military and thrown billions to develop the China-Pakistan Economic Corridor which forms a crucial part of President Xi Jinping's Belt and Road Initiative. All three countries are nuclear-armed, and India has fought wars with both neighbors over lingering border disputes.

The most recent dispute was in the summer of 2017 when India and China withstood a 73-day military standoff on the Doklam plateau bordering Bhutan -- the longest such confrontation between the two in decades. With Pakistan, relations have been frayed in recent years after direct talks stalled and the military exchanged fire in the disputed region of Kashmir.

Tension flared again on Feb. 9, when China objected to Modi's visit to the sensitive border state of Arunachal Pradesh which Beijing claims as its territory. New Delhi responded by calling the northeastern state "an integral and inalienable" part of India.

"China is an emerging power and [is engaged in activities] such as the naval expansion and creation of its sphere of influence in the region and beyond," said Shamshad Ahmad Khan, visiting associate fellow at the Institute of Chinese Studies. "Therefore, countries in the region, including India [as well as] Japan are preparing to avoid a scenario [of confrontation]" by boosting their defense preparedness, Khan pointed out. 

But analysts said that India should have started the modernization of its military at a much faster pace and that the government should have allocated more money to rejuvenate the sector. They say, in particular, the process to replace existing naval utility choppers should have been started 20 years ago.

"The deliveries of the new helicopters too will not be a swift process and it will take several years," a person familiar with the matter said.

Analysts said Indian armed forces are struggling with an acute shortage of resources, and the budgeted 8% hike in defense spending, for which over 3 trillion rupees have been allocated for the year starting April, will not be enough.

"The scope for a hefty increase in defense expenditure in the medium term looks grim."

Laxman Kumar Behera, research fellow at Institute for Defence Studies and Analyses

By comparison, the recent budget included 750 billion rupees allocated for just agricultural income support alone. This was seen as a move to placate farmers who are struggling with a mountain of debt. The government also announced measures to boost rural employment and build roads in the budget in moves seen to win rural votes ahead of elections expected to take place by May.

"With the recurring effects of many of the promised 'populists' measures continuing in future budgets, and a tight fiscal path the government has articulated, the scope for a hefty increase in defense expenditure in the medium term looks grim," according to analysis by Laxman Kumar Behera, research fellow at Institute for Defence Studies and Analyses.

He pointed out that funds for the three services alone -- army, navy and air force -- are 1.12 trillion rupees short of the projected needs of 3.7 trillion rupees in the current fiscal year.

This week's developments follows the arrival of the first batch of four Chinook heavy lift helicopters for the Indian Air Force on Feb. 10. The delivery was part of a 2015 contract signed between the government and Boeing for the procurement of a total of 22 Apache attack helicopters and 15 Chinook transport helicopters.

On Jan. 31, India's Defence Acquisition Council approved the local construction of six submarines for the Indian navy at a cost of over 400 billion rupees. This is the second project under the strategic partnership model.

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