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Israel overtakes Russia as Defence’s top supplier

In a shift that has Russia and Europe worried, Israel may have overtaken Russia as the biggest beneficiary of India’s defence budget in the last two years.

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In a shift that has Russia and Europe worried, Israel may have overtaken Russia as the biggest beneficiary of India’s defence budget in the last two years, officials in the know said. Also worrying the Russians and the Europeans is the growing importance of the US for the Indian military.

Requesting anonymity, a senior official in the defence ministry said that Russia has been the biggest supplier to India’s defence sector for decades.

But it may have lost out to Israel, which seems to have cornered a larger share of India’s defence spend recently. “I don’t have country-wise data but it may be due to differences over Gorshkov and other Russian programmes,” the official said.

The Americans, too, have grabbed significant Indian deals. Worried over the developments, Europeans are hoping that India brings in more transparency and balance to its procurement process. Several European firms at the Aero India expressed concerns over the influence that politics has on the country’s defence purchases. Of particular concern to them is the trend of purchases without a multi-tender process.

Requesting he not be named, a senior executive of a European defence firm said, “We are okay with open tendering. But the trend of FMS (foreign military sales) deals and joint development programmes are skewed against us, and in favour of the US and Israel.”

Over the past few years, India has entered into joint development of several missile systems with Israel as also procurement of top-end technologies without a tender process. After the November 2008 terror attacks on Mumbai, the two countries decided on the joint development of medium-range surface-to-air missiles (MRSAM) for the Air Force.

Though it is technically a joint development between Israel’s IAI and Rafael, and India’s Defence Research and Development Organisation (DRDO), a significantly large portion of the contract - worth Rs 12,000 crore - will go to Israel. On similar lines, there’s a Barak new generation missile project underway for the Navy. “Most of Israeli procurements have not been through open tenders,” said the European firm official.

Another European executive said that some of the biggest deals India has signed with the US, too, have been without an open tendering process. Among them are the purchase of USS Trenton for the Navy and the purchase of C-130 J Hercules transport planes. These were done through the FMS route, meaning a government-to-government deal.

Unlike the US, Europe hasn’t been able to corner India’s defence share by offering government-to-government deals. A missile programme between European manufacturer MBDA and DRDO is on the cards but otherwise, the last few years haven’t been very encouraging for European firms. In fact, a deal for the purchase of 197 Eurocopter helicopters was cancelled in the final stages after several years of field trials and evaluations. The Europeans are still not convinced on the reasons given for cancelling the contract.

Some European and Russian officials warn that strict export controls and technology denial regime in the US may become a challenge for India later. A case in point is the recent replacement of Boeing with a European consortium EADS for consultancy for the light combat aircraft Tejas.

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