The Art Of The Defence Deal

A Su-30MKI taxiing on a runway (Image: 1st Lt. George Tobias/ Public Domain)
India's $620 billion defence budget is riddled with corruption and supply chain issues. Why can't India make its own weapons?

The sum of $620 billion. That’s how much the Federation of Indian Chambers of Commerce and Industry estimates will be spent on defence between 2014 and 2022. Up to half of this, alone, will go to buying new weapons.

It’s a figure that has arms manufacturers from both the former Eastern and Western blocs lining up with their wares. For there is no ideological aversion when it comes to arms. The Indian armada would see Russian tanks accompany American attack helicopters, carrying Israeli missiles – a supply chain nightmare but also a foreign policy goldmine.  

India’s military shopping list makes for a must-discuss agenda point in the Prime Minister’s foreign visits. Since assuming power in 2014, Narendra Modi has purchased Rafale fighter jets for $8.7 billion from France, Apache and Chinook helicopters for $2.5 billion from the United States, S400 anti-aircraft missile system for more than $5 billion with Russia and a $2 billion deal for MRSAM surface-to-air missiles with Israel. To name a few.

And the list of things to buy can only grow. India was the world’s largest arms importer for nearly five years between 2012 and 2016. It’s a trend that is unlikely to change, as up to 40 percent of the country’s weapons are either obsolescent or already obsolete.

The need to upgrade

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The indigenous HAL Tejas parked next to an American F-16 and European Eurofighter Typhoon at Aero India 2009 (Image: Vishak/ Creative Commons)

Defence deals are what other nations look forward to signing with India. For unlike in a trade deal, when it comes to defence, India has few bargaining chips in hand. The country desperately needs to upgrade its ageing (often malfunctioning) fleet of ships, aircraft, missiles and rifles. Adding urgency is the military modernization of India’s main rivals in South Asia – China and Pakistan – even as border tensions rise with both nations.

The clock is ticking to buy fresh, for the figures are bleak. India has barely enough ammunition to fight ten days of war. Its Air Force is eight squadrons (of 18 planes each) short of the minimum operational strength it needs to fight both China and Pakistan at once. To add insult to injury, what weapons India has are often unusable as is.

Only about half of India’s Sukhoi fighter planes are air-worthy at any one point of time, for want of spare parts or maintenance, according to a 2015 Comptroller and Auditor General (CAG) report. While this may seem like dangerous knowledge for a country at constant threat of war, the problems of the Indian military have been known for years. The CAG has developed a habit of dropping inconvenient truth-bombs – from the Sukhoi readiness to the ammunition shortage to the failure of indigenous industry to fill in the gaps.

But this urgency shakes hands with big money, inviting murky deals, kickbacks and corruption scandals. Serious allegations of fraud and misappropriation of funds hound India’s defence deals. The $208 million Embraer deal, the Augusta Westland helicopter deal (where the former Airforce chief S P Tyagi is said to be involved), the $1.2 billion deal to purchase Hawk trainer jet engines (with serious flaws), where Rolls Royce is said to have paid bribes through middlemen – are but a few strokes in an elaborate canvas of corruption.

The politics of defence deals

Defence deals are also intricately linked to ‘aid’. It’s no surprise that foreign nation-states get snarky when deals don’t work out their way.

In 2012, as part of what was dubbed ‘the mother of all defence deals’, India signed an agreement with France to buy its Rafale Medium Multi-Role Combat Aircraft (MMRCA) – over the Eurofighter Typhoon being pushed by the UK and other EU member states.

The deal was portrayed as a snub for the UK, with a British tabloid suggesting that the country cease its roughly £1 billion aid programme for India. The then prime-minister David Cameron also stepped up the angst, expressing his ‘disappointment’ at the outcome – while members of the British parliament openly denigrated the policy of doling out aid in the hope of influencing defence deals.

While humanitarian aid may only mildly affect one’s choice of missiles, other countries have turned to psychological bargaining tricks. The Soviet Union and later Russia has historically been India’s primary arms dealer. But since the fall of the wall, India has developed extensive defence trade with the United States – the latter emerging as India’s largest arms supplier in 2014. It didn’t help that India didn’t consider the Russian aircraft on offer, instead settling the final decision as one between the Rafale and Eurofighter.

The next year, rumours started spreading that Russia was considering a sale of Su-35 fighters, its most advanced model on the export market, to Pakistan. These were later quelled, but not after doubts began to be raised about Russia’s erstwhile Indian loyalty.

Pakistan, no stranger to this game, has also threatened to jump shop with the United States (their historical arms dealer) when a funding program was halted. They can always buy Russian or Chinese jets instead of American, they said.

Supply chain nightmare?

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U.S. Air Force pilots flying with their Indian counterparts (Image: Tech. Sgt. Shane A. Cuomo/ Public Domain)

Ironically, the original MMRCA deal for 126 fighters was cut short to 36 – meaning the floor is still open for about a hundred single-engine fighters. The new deal, worth $10 billion, has been reshaped to fit into Modi’s “Make in India” policy – and the contenders are the Swedish Gripen and the American F-16.

Buying the F-16 would lead to an awkward situation in the event of a war with Pakistan. American-made F-16s would be fighting Indian-made F-16s, with questions about how supply chain will be maintained to two warring countries at the same time. But buying the Gripen, which is powered by a Swedish derivative of an American engine, would also lead to some sacrifice in autonomy in the global spare parts supply chain.

This year, the battle for India’s arms switched to the sea. The ‘Mother of all Underwater Defence Deals‘ is now underway – as India seeks to buy six super-stealthy diesel-electric submarines for nearly $11 billion. The contenders this time are France, Germany, Russia, Spain, Sweden and Japan.

Failure to produce its own weapons

India Defence Savings Stamp, 1943 (Image: British Government/ Public Domain)

There is only one contender that seems to miss out on all of India’s defence deals – India. The domestic military-industrial complex has consistently failed to design and produce weapons on time, or to the specifications of the Armed Forces. The latter has often changed goalposts, leading to the state’s design bureaus rushing and failing to catch up. By the time a weapon is produced, a stopgap is usually imported to fill its place – making the years of R&D seem pointless.

Humanitarian crisis; a testing ground for weapons

The Syrian Civil War has become a place for the world’s competing arms blocs to showcase their deadliest weapons. Russian officials have officially admitted to this, though it was also apparent from the propaganda videos that ‘show off’ military hardware put to action against targets.

The Rafale’s combat deployment in Syria gave Indian defence officials a chance to see the plane in action. So too is the case with American weapons like the Mother-Of-All-Bombs and the Russian weapons like the T-90 Main Battle Tank.

There’s proof that these demonstrations can pay off. For years, the General Atomics MQ-9 ‘Reaper’ drone has bombed targets in the Middle East and Pakistan. Perhaps, it was after seeing it in action and vicariously getting a feel for its performance, that India decided to place an order in June 2017- for 22 of them, at a cost of $2-3 billion.

All of this grandstanding does not come cheap. The Indian taxpayer has no other choice but to pay dearly for it.

India’s inability to produce its own weapons continues to enrich the world’s weapons manufacturers. Barring an indigenous arms industry, India will always be beholden to the rest of the world for its weapons. And manipulating the Indian defence deal shall continue to evolve as an art – one where humanitarian crises and geopolitical conflicts enrich power brokers experienced in bribery and kickbacks. After all, it is a game of demand and supply that helps destroy each other.

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