Russia is not a reliable defense supplier anymore

Rahul Bedi of Jane’s Defense Weekly makes an interesting observation in an article “Beware the American military embrace” in the September 19, 2008 issue of India Abroad. He further elaborates, ” It is anticipated that over the next four years, India’s outlay on defense procurements will be in excess of $30 billion, and further that this figure will climb to $80 billion by 2020. Americans are very keen to cash in on this market, which covers the whole range of equipment for India’s navy and air force.” We are all aware of the historical perspective on ‘Indo-Russian Security Relations’ but that was more than 50 years back. India is no more as vulnerable as it used to be viz-a-viz Kashmir at the United Nations. I am not suggesting for even a moment that we do not need a close relationship with Russia. What I am absolutely convinced about is that we need not be as suspicious of the United States as we have been for the past 61 years. The situation has changed since 1998. The US does not take India for granted any more. They still try to push us around but that is more out of habit than any reasonable conviction. Besides, there are 2.7 millions Indians living in the United States who are quite influential and resourceful. They are extremely patriotic when it comes to India’s national interests. On the flip side there are only 15,000 Indians living in the Russian Federation and with absolutely no leverage what so ever.

Indo-Russian bilateral relations have deteriorated since the fall of the Soviet Union in 1991. Russia does not consider India as an ally anymore and frowns upon the growing Indo-US relationship. Russia has reneged on it’s contract to supply the Soviet aircraft carrier Admiral Gorshkov for $1.5 billion by 2010 and is now demanding $3.4 billion for the same package with the delivery in 2014. This is not an isolated case of breach in contract. Russian misbehavior can be seen across the board. Can you imagine this kind of reneging of a contract with an American company? The media would be all over the place and the supplier would pay a heavy public relations price in the international defense market. Unfortunately for India, its bureaucracy is littered with Soviet era apologists. There are enough Russian Agents in the ministry of defense in India, ready to steer any prospective defense contract towards their patron. It is time we give careful consideration to our national interests rather than pander to the Russian whims. Ofcourse, there is some down-side to dealing with American suppliers as well. They would only deal with countries that honor American laws and India does not necessarily conform to US laws. To overcome this hurdle, the US government has instituted a government to government initiative called “Foreign Military Sales” program. This FMS negociates the defense deals for India and other countries with the ‘Military Equipment Suppliers’ for a service charge of 1-2 percent of the total value of the deal. Every thing is above board and makes it so much easier and faster. India must stop being over suspicious and grow up.

India must increase its Defense Budget to $60 billion…

India is a very large democracy surrounded by huge poverty all around. The Indian sub-continent has been unstable since it’s independence from the British in 1947. Pandit Nehru, the first Prime Minister of India mis-read the situation in the neighborhood and paid a heavy price in 1948. Jawaharlal Nehru had a different vision for India, some good some bad. Now India must follow the ‘Vision 2020’ articulated by former President Dr APJ Abdul Kalam (the 11th President of India). He envisions India to emerge as a fully developed economy by the year 2020, ready to lead the world with other countries like the United States, China and Russia. It is time India starts taking its responsibilities seriously and act accordingly. If it does not, it would undermine its own security in the long run. There is a power vacuum in South Asia and beyond, since the fall of Soviet Union. If this space is not occupied by a rising power like India, China is bound to spread its influence beyond acceptable limits.

Currently, India’s defense budget is estimated between $26 billion and $34 billion, depending upon what is included and what is not. Either way, it is way too small to reasonably fund its security and humanitarian commitments. At this stage you can not calculate the defense allocation as percentage of GDP. The total footprint is too small and the basic defense infrastructure is virtually non-existent. India must also stop worrying about China’s defense budget. We have very different problems and very different commitments. The next question is, how do you fund such massive increase in the defense outlays? Government of India, for some strange reason, has continued to depend on ‘Public Sector Undertakings’ for major defense procurements, including capital equipment. Besides, all major weapon systems are either imported or locally assembled at the ‘State Owned Enterprises’. This is a major reason why our defense requirements are not being fully funded.

This bureaucratic mind-set must change. India is no more a command and control economy. We have a large and responsible ‘Private Sector’. There are more than 50 billionaires in India, spread across all 35 States and Union Territories. They have the technologies and the infrastructure to start contributing in developing India’s Military-Industrial Complex. Our private companies are large and resourceful enough to form collaborations all over the world and develop the most complicated weapon systems around. But, India needs far more than weapons alone. We do not have any significant lift capabilities by land, sea or air. Earlier this year, India placed an order for 6 Hercules C-130 J military transport planes from Lockheed Martin of USA. The deal is worth around $1 billion and the expected delivery date is 2011 at the earliest. The fact of the matter is that we are immediately short of 20 such transport planes but cannot commit any funds because of budgetary constraints.

India needs a long-term and a medium-term defense procurement policy. Let us say, our medium term defense budget is $60 billion starting April 1, 2010 and increases to $120 billion by March 31, 2020. This budget must be equally distributed amongst all three services. Indian Navy must get atleast 30 percent of the budget, Indian Air Force and Indian Army too should get 30 percent each. The remaining 10 percent must be allotted to a new ‘National Guard’, like the one in United States. But the most important component of this plan is the participation of the Indian Private Sector. To begin with, atleast 30 percent of the budget should be allocated to the private sector and by 2020, increase to 70 percent of all procurement. For example, let us take the case of Super Hercules C-130 transport aircraft. If we need additional 120 Hercules, we would rather assemble them in India than depend entirely on Lockheed Martin, and by implication, the whims of the US Congress. In that case, the order would increase from current $1 billion to $20 billion. Indian companies, like Tata or Ambanis or even Larsen & Toubro, could form a joint venture with Lockheed Martin to produce the required number of transport aircrafts for Indian Air Force, Indian Army and even Indian Navy. This plan would also spur the growth rate of the Indian economy.