Scrapping defence deals: Pros and cons

The recent decision by the Union government to terminate the contract for 12 helicopters with Agusta Westland has elicited a lot of attention. The deal was worth Rs 3,546 crore and was meant to procure VVIP helicopters. "The contract has been terminated on the grounds of breach of the pre-contract integrity pact and the agreement by Augusta Westland," said a MoD official.

This was in line with defence minister AK Anthony’s emphatic assertion that Augusta Westland had violated the integrity pact, which results in the cancellation of contract, blacklisting and penal action  “for the use of undue influence.” While this is in keeping with Anthony’s efforts to inject probity into the murky world of Indian defence deals, it also raises a few pertinent questions about the future of our armed forces.

Cancelling defence deals on ethical grounds is noteworthy, as it sends out a clear message to the world that India will not brook corrupt middlemen and shady arms dealers. However one should also look at the requirements of our armed forces and check if they can manage without the aircrafts, submarines, helicopters and so on. Will cancellation of these deals eliminate the bogey of ‘middlemen’ from Indian defence deals? What is the alternative we can present to our armed forces? Is it indigenisation? If that is the case how prepared are we to manufacture defence products without relying on other nations? 

Harsh reality

It must be stated that cancelling defence deals is nothing new. Be it the blacklisting of the Swedish company Bofors or the German submarine maker HDW, the Indian government has been prompt in its response. However it is in dealing with the consequences that the government has been found wanting. In the case of Bofors the Indian Army did not have a decent artillery gun till 1999, when the ban on Bofors was lifted during the Kargil War. We did not have spare parts nor did we possess the ability to make them ourselves. It is the same story with the HDW blacklisting. The Indian Navy was running from pillar to post to secure spare parts for its submarine fleet. 

The spectre of middlemen has long been the bane of our defence procurement deals.  

The Central Bureau of Investigation (CBI) has compiled a list of ‘undesirable contact men’ comprising of “persons who are suspected to be resorting to corrupt practices in their dealings with official agencies.” Government ministries and departments are forbidden from conducting business with these alleged lobbyists and bribe-dispensers, officially or unofficially. Even though Anthony has declared a war on corrupt practices in defence deals, it is rather perplexing that there has not been a single conviction of any middlemen or arms dealer.

Such scandals have been an inveterate feature since the inception of our republic, starting with the Jeep scandal in 1948. Aspersions have cast on nearly every major defence deal since. In 1999 Rear Admiral SV Purohit filed a petition before the Delhi high court to challenge his own stalled promotion. This petition contained shocking allegations about the role played by middlemen. The government ordered an investigation by the Central Vigilance Commission.The CVC concluded in its interim report that “the ban on agents... is, in effect, not a ban at all.”

There was no impact on the activities of the middlemen. It found ample evidence that middlemen exerted considerable influence in the purchasing process, even for minor items and spare parts. In 2009, Sudipta Ghosh, the recently retired chairman of India’s Ordnance Factories Board - the government’s defence manufacturing division - was charged by the CBI with corruption and illicit collaboration with three middlemen who were featured in the list of undesirable contact men.

According to the Stockholm International Peace Research Institute (SIPRI) India has over the past six years been the world’s number-one importer of arms, ahead of China, South Korea and Pakistan. So the stakes are very high for all the players involved. India now buys 12 percent of all the weapons and military hardware sold on global markets. India has the eighth-largest defence budget in the world. The United States and China have a much larger defence budget, but they also manufacture most of the equipment they buy. The failure to develop an indigenous arms industry has crippled our armed forces, making them heavily reliant on imports.

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