Indian military modernization could face trouble

India’s rapid defense modernization agenda is running into trouble. More than a half-dozen mega-projects, collectively worth over 3 trillion Indian rupees ($47 billion), are in limbo, awaiting final signatures. Included are fighter aircraft, light-utility helicopters, naval multirole rotorcraft, future infantry combat vehicles, new-generation stealth submarines and countermine vessels.

The hurdles are numerous: a low-budget, drawn-out contract award process; insufficient and limited vendor base, offers that do not match the request for proposals, lengthy field trials and long lead times to become indigenous.

For the fiscal year 2017-18, the Indian government had allocated approximately $13 billion out of a total defense budget of $40.1 billion for procurement of defense equipment. Including contracts concluded earlier, only around $1.2 billion is left for new projects.

The defense ministry has asked for an additional $3 billion, citing the need for critical defense equipment, but the finance ninistry has yet to respond to the request as the country struggles to meet deficit goals.

Meanwhile, there has been a leap in commitments. According to Subhash Bhamre, India’s junior minister for defense: “The Indian Defense Ministry signed 23 contracts with foreign vendors worth $12.1 billion during the last financial year.” The figure was $4.3 billion in 2015-16 and $1.69 billion in 2014-15.

However, outstanding bills are looming on the horizon. In 2015, India signed $3.1 billion deal for 22 Boeing AH-64E Apache Longbow attack Helicopters and 15 Chinook heavy-lifters. With deliveries slated to begin in 2019, payments are coming due. Similarly, the country is set to receive a total of 36 Rafale warplanes, after striking a $8.7 billion deal with France in 2016. The first Rafale should land in India in 2019 as well.

Russia plans to deliver 10 Kamov Ka-226T military helicopters to India in the first round of a $1 billion deal, under which India will procure 200 such aircraft. The Indian Defense Ministry is expected to make the first payment in late 2017 or early in 2018.

“We plan to deliver the first shipment of 10 helicopters after we receive the first payment. We are still in discussions with the Indian Ministry of Defense as to when the first payment will be made. We hope it will be made by this year [2017],” says Russian Helicopters CEO Andrei Boginsky.