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INDIA: Top Defense Firms Vie to Feed Indian Arms Appetite

by Muneeza NaqviNYTimes.com - Associated Press
February 16th, 2010

NEW DELHI (AP) -- Top weapons makers, vying to feed India's voracious appetite for arms, brought their helicopters, night vision goggles and mine-proof vehicles to New Delhi this week in hopes of winning a share of one of the world's largest defense budgets.

With its growing economy and emergence as an Asian power, India has rapidly increased its arms expenditures over the past decade, replacing obsolete Soviet-era military hardware with the latest technology in a race to keep up with regional rivals Pakistan and China.

''India is becoming a major actor worldwide,'' Filippo Bagnato, the executive vice president for technical, industrial and commercial development of the Italian aerospace and defense giant Finmeccanica, said Tuesday.

This year's DefExpo-India -- the sixth such event -- has drawn about 650 defense companies from 35 countries, including Boeing, Lockheed Martin, Thales and BAE Systems, to set up stalls in a sprawling exhibition center in the heart of the capital.

India, which needs to replace equipment bought from the Soviets in the 1970s and 80s, led the world in the purchase of military hardware in 2004 and is still in the top four, according to Rahul Bedi, a South Asia analyst with London-based Jane's Defense Weekly. He said India is expected to spend $80 billion between 2012 and 2022 to upgrade its military.

International defense giants are hoping to secure most of that multibillion-dollar pie: India imports more than 70 percent of its military equipment, mainly from Russia, Israel, France and Britain. American companies are also slowly finding a foothold in the Indian defense market as the relationship between the two countries has warmed over the last few years.

So despite a notoriously slow procurement process filled with red tape that can take close to a decade to unravel, the sellers keep coming.

''It's ultimately worth it for the sellers because the volumes that are acquired and needed compare with nowhere else in the world,'' said Bedi.

In addition to needing to update aging equipment, India's defense buying spree is spurred by rivalries with both of its major neighbors -- Pakistan and China.

It has fought three wars with Pakistan -- two of them over the Himalayan region of Kashmir. Tensions with China have risen as well in recent years, as the two nations contend for regional dominance.

Bedi said Pakistan's military arsenal, though smaller than India's, is ''a lot younger because their main suppliers are the United States and the Chinese.''

Where the Chinese are concerned, ''they completely outweigh the Indians and are in a different league altogether.''

The current budget for Pakistan's powerful military, which also receives billions of dollars from the U.S. for helping fight Islamist militancy, is about $4.4 billion -- a fraction of India's current $26 billion, which represented a 10 percent increase. On the other hand China's defense spending increased by almost 15 percent last year to $71 billion, a figure that is thought by many analysts to represent only a portion of total defense spending.

Bagnato's Finmeccanica has already sold Sea King helicopters, torpedoes and surveillance equipment to the Indian defense services, and this year is hawking a slew of aircraft and surveillance equipment at its stall.

In 2008, Lockheed Martin Corp. won a contract to supply six C-130J Hercules transport aircraft for India's air force, the first of which are expected to arrive in early 2011.

New Delhi is also shopping for 126 fighter aircraft, a deal worth $10 billion, and 197 helicopters worth about $4 billion.

India's Defense Minister A.K. Antony told reporters at the fair that the country's defense policy ''is not against any one country,'' but added that it was a top priority ''to strengthen our armed forces to act as an effective deterrence.''

For the defense companies, that means India plans to keep spending enormous sums on arms.



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