The mood turned sombre at the Defexpo 2014 here following Defence Ministry A K Antony’s announcement that India has no funds to do defence business anymore. Speaking at the event, Antony said India had no funds for new defence acquisitions this fiscal after Rs 7,870 crore from the capital budget was transferred to the revenue budget.
The statement has resulted in major confabulations within defence companies, both foreign and domestic private sector, on going slow till “business prospects show up” in India.
The Defence Minister also said India has not yet made down payment (about Rs 600 crore) toward a Rs 4,000-crore contract for six more C-130J special forces planes, though it was signed in December 2013, due to lack of funds.
Industry sources said US firm Boeing will now focus on “deliveries” of planes and missiles that it has signed contracts for over the next six months, instead of signing new contracts.
Boeing is currently supplying eight P-8I maritime patrol planes and the anti-submarine warfare Harpoon weapon systems, apart from 10 C-17 strategic transport planes. Its Chinook helicopter is the winner of the tender for 15 heavy lift helicopters and its Apache has been chosen by Indian Air Force as the attack helicopter it wants to meet the requirement of 22 gunships.
United States firm Raytheon’s expansion plans also may not go through, sources said. It would, however, continue to have a liaison office in New Delhi to pursue business. Raytheon has over the years pushed for sale of its Patriot missile defence system, Javelin anti-tank guided missile and Stinger man-portable air defence missile system, but has had no success.
In the case of BAE Systems, will focus on deliveries of 57 more Hawks, of which 17 would go to the Indian Navy and the rest 40 to the IAF. The company is waiting for the last two years to get the orders for supplying additional 20 Hawks for the IAF’s Surya Kiran aerobatics team.
BAE Systems had in the 2011 decided not to bid for the 155mm 52 calibre towed artillery gun tender after Indian Defence Ministry had tweaked the original parameters. BAE Systems then felt that its gun was superior to the specifications sought by the Indian tender and decided to keep away. In November 2013, the UK firm again decided not to bid in the tender for naval 127mm guns for integration on board its 13 mainline warships.
European firm Airbus too is waiting to sign a Rs 6,000 crore contract for supplying six A300 MRTT midair refueller to the IAF for the last two years. It is also waiting for a decision from the Defence Ministry on the tender for 197 light utility helicopters worth Rs 7,500 crore for the Army and Air Force.
This tender is stuck due to investigation into complaints against a Brigadier demanding a bribe of Rs 25 crore from Italian major AgustaWestland.