Thursday, Oct 23, 2014

Eyes on defence deals, Western powers rush to court PM Narendra Modi

Modi-on-Place PM Narendra Modi sitting in the cockpit of a MiG 29 K fighter. (Source: Reuters)
Reuters | New Delhi | Posted: June 29, 2014 12:22 pm | Updated: June 30, 2014 1:36 pm

Western governments are rushing to visit Prime Minister Narendra Modi, drawn by the prospect of multi-billion-dollar deals as the government prepares to open the nascent defence industry to foreign investment.

Senior politicians from France, the United States and Britain arrive in quick succession over the next 10 days as PM Modi prepares to accelerate the modernisation of the country’s mostly Soviet-era weaponry.

Modi intends to build up India’s military capabilities and gradually turn the world’s largest arms importer into a heavyweight manufacturer – a goal that has eluded every Prime Minister since independence in 1947.

On the table is a proposal circulated within the new government to raise caps on foreign investment – with one option to allow complete foreign ownership of some defence projects.

“All the countries are trying to make their case, especially as there is the sense that the Indian market will undergo a shift,” said Harsh Pant, professor of International Relations at King’s College in London.

“They get a sense from their dealings that something dramatic is going to happen and they want first-mover advantage,” said Pant, who specialises in Indian Defence.

First to arrive in New Delhi will be French Foreign Minister Laurent Fabius, whose top priority is to close a stalled deal to sell India 126 Rafale fighter jets, built by Dassault Aviation , for an estimated $15 billion.

Fabius, who arrives on Monday, will meet Modi as well as Defence and Finance Minister Arun Jaitley, who can decide both whether to sign the deal and when to release the money.

US Senator John McCain is also due in India next week. McCain, whose Arizona constituency includes weapons makers such as Boeing and Raytheon, told the Senate on Thursday that Washington should seek to bolster India’s economic and military rise.

“This is an area where U.S. defence capabilities, technologies, and cooperation – especially between our defence industries – can benefit India enormously,” McCain said of India’s drive to modernise the armed forces.

UK STILL HOPEFUL ON FIGHTER JET

In the second week of July, Britain is likely to send in Foreign Secretary William Hague and Finance Minister George Osborne, a British government source said on Friday.

Britain has drawn some cheer from the slow progress of the negotiations for the Rafale deal. The Eurofighter Typhoon was shortlisted along with the Dassault fighter before India announced the French jet was the winner.

Cost escalations and disagreements about building the Rafale in partnership with India’s state-run Hindustan Aeronautics Limited have complicated talks with France, and London has never entirely given up hope that it will return to the race.

However, on Thursday, a source at the Indian Defence Ministry said the deal was likely to be finally closed during Fabius’ visit and could be signed this year. A French Foreign Ministry source said talks were ongoing, but refused to provide more detail.

Russia, for years India’s top weapons supplier, pipped all three countries to the continued…

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