India approves $3.3b artillery buy in modernising drive

This article was first published on Nov 24, 2014

NEW DELHI - India has approved a 158 billion rupee (S$3.3 billion) purchase of artillery, the first acquisition of large-calibre guns since the 1980s as Prime Minister Narendra Modi seeks to modernise the armed forces.

The Defence Acquisition Council authorised 229 billion rupees of procurements on Saturday, including the artillery, a government official told reporters in New Delhi. He asked not to be identified, citing rules.

The meeting was the first since Mr Manohar Parrikar became defence minister earlier this month.

India has authorised US$19 billion (S$25 billion) of weapons purchases since Mr Modi swept to power in May and took a firmer line in border disputes with Pakistan and China.

Mr Parrikar has vowed quick and transparent decision-making to spur the military of the world's largest importer of major conventional weapons.

"The Modi government is more realistic and pragmatic when it comes to defence acquisitions," said Mr Amit Cowshish, a distinguished fellow at the Institute for Defence Studies and Analyses.

"Earlier, defence procurements used to get stuck for years on flimsy grounds."

The next step will be to seek tenders for the manufacture of the artillery. If a foreign manufacturer wins the tender, the first 100 pieces will be imported and the remaining 714 will be made in India through technology transfer.

Mr Modi is trying to encourage domestic production, a policy discussed at the meeting, the official said. A decision on a proposal from the defence units of India's Tata Sons and Europe's Airbus Group to supply transport aircraft was deferred, the official said.

Mr Parrikar commissioned a maritime security intelligence sharing network yesterday.

Its objective is to monitor the Indian Ocean region for threats such as the 2008 Mumbai terror attacks.

Mr Modi faced defence spending near a 50-year low as a percentage of the economy when he took power six months ago.

A history of corruption scandals slowed military purchases.

Aside from authorising weapons purchases, the government has loosened restrictions on procurement from defence manufacturers affected by graft allegations, and made it easier for private companies to maintain military equipment.

Mr Modi has also allowed higher foreign investment in the defence industry, and his administration is said to target the signing of a contract for 126 Rafale fighter jets by year's end.

BLOOMBERG