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India's $4 bn howitzer gun buying spree: Why Russia may not have an edge

by Rajeev Sharma  Jul 19, 2013 17:41 IST

#Bofors   #ConnectTheDots   #Howitzers   #India   #Indian Army   #Russia   #US  

India has begun the process of acquiring howitzer guns of various types. The contracts would be worth hundreds of millions of dollars each and their combined value is likely to be well over a billion dollars.

India has set aside $4 billion for its artillery projects, neglected for decades largely due to political controversies and corruption scandals. The development is significant for two reasons.

One, the Indian Army has not purchased a single gun since the infamous Bofors deal 27 years ago, a deal that rocked the Indian political establishment and implicated then Prime Minister Rajiv Gandhi and other senior Indian officials. Eventually though none of the charges could be proved.

Two, the gun deals may be going through despite the fact that India, due to have general elections in less than ten months, seems to have put an unannounced freeze on any defence deals, particularly with foreign companies.

Russia will have have an important role to play in at least one of the upcoming howitzer contracts, expected to be worth around $350 million. Russian Rosoboronexport seems ideally suited for supplying 100 self-propelled tracked howitzer guns to the Indian Army and the trials are slated to begin later this month itself.

AFP

India's most prominent set of howitzers. AFP

Rosoboronexport is likely to be pitted against an unlikely rival: Larsen&Toubro, an Indian company. L&T has been issued industrial licenses for a wide range of products after Government of India’s decision to open up defence production to the private sector. The licenses issued cover design, development, construction/ manufacturing and assembly of a wide range of defence equipment, arms and armaments and weapon launchers.

Insiders say that L&T is expected to give the Russian company very stiff competition. The L&T howitzers have been built in collaboration with South Korean Samsung Techwin, which means that the Russian companies’ rivals in the Indian defence industry are increasing by the day.

The South Korean company has already signed a contract with L&T for making key technologies available to the Indian company and producing the guns here.

This sends out another important message to the Russian defence industry that has not done too well in the Indian defence sector lately, and the Russians have lost out to American, European and even Israeli companies on several big-ticket defence deals.

The message is this: the Russians need to develop Indian partners, the more the better, as recent policy guidelines from the Indian defence ministry have laid huge stress on the ‘buy Indian’ theme.

Indian Defence Minister AK Antony’s statement in Parliament on 6 May should leave no one in doubt on this score.

This is what he said while confirming the upcoming contract for 100 guns: “A case for procurement of Qty.100 x 155mm/52 Caliber Tracked (self-propelled) guns is in progress wherein three Indian vendors, including two private sector companies, have been selected for trials of their equipment. The recent amendments to the DPP-2011 which have been accepted by the Defence Acquisition Council aim to give higher preference to indigenous capacity in the Defence Sector.”

The recent Defence Procurement Procedure (DPP) guidelines have made it clear that the Indian government will choose to import defence goods only as a last resort and in cases where the required technologies are not available within the country. However, these guidelines have left enough room for foreign companies to forge joint ventures with Indian companies.

The Indian Army modernisation programme is quite ambitious. It has plans to induct 2,814 guns of different types, capabilities and calibre. Assuming for argument sake that the Indian Army was to induct all these guns, from foreign as well as domestic sources, at one go, it would cost around ten billion dollars at current exchange rates.

However, the actual process will take years. The current contract of 100 guns itself is unlikely to be inked this year as the trial phase itself would spill over to the first quarter of next year. The guns will be undergoing winter trials this year-end.

Moreover, given the renewed focus on self-reliance and indigenisation, the Indian Army has asked the state-owned Ordnance Factory Board to deliver over 300 indigenous versions of Bofors guns.

The Indian Army’s current guns stock is believed to have touched an all time low of just about 200 operations guns of 155/39 caliber, one of the reasons behind the then Army Chief General VK Singh shooting off a no-holds-barred letter to Prime Minister Manmohan Singh about the dire state of Indian military preparedness last year.

There is yet another message for the Russians that booms out loud and clear from the Indian guns saga. The Russians need to translate their deep political clout with the Government of India into bagging big Indian defence contracts through the government-to-government route.

In May last year, the Indian defence ministry had cleared a $660 million deal for buying 145 ultra-light M777 guns from the United States. The move was duly cleared by the Defence Acquisition Council headed by the defence minister. A significant feature of the M777 deal is that the guns are being bought under the Foreign Military Sales (FMS) programme of the US government, a government-to-government route.

The Russians are not unaware of this. In fact, the new Russian strategy vis a vis Indian defence industry will be very much visible in the upcoming top-level Indo-Russian bilateral exchanges from September onwards.

The writer is a Firstpost columnist and a strategic analyst who can be reached at bhootnath004@yahoo.com.