Procurement: Why India Flails At Procurement

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April 12, 2014: India imports more weapons than any other country. Over the last decade those imports have more than doubled. There are several reasons for this. India has one of the top five armed forces in terms of manpower (about a million troops) and needs a lot of stuff. Until the end of the Cold War in 1991 India had a lot of government control in the economy and did not develop companies that could produce modern weapons, or modern anything for that matter. So many of the more techy weapons (armored vehicles, warplanes, warships, artillery, missiles and the like) were imported. Russia offered the best prices and even allowed India to assemble many of the weapons (like MiG-21s and tanks) in India. This saved some money and allowed India to say these weapons were “made in India.” Actually they were just assembled in India because India could not produce most of the components, which had to be imported from Russia.

In the 1990s India began to realize that their economy needed some fundamental reforms and many were implemented. China’s reforms a decade earlier, and the rapid growth of the Chinese economy ever since made a big impression in India. Freeing up the economy meant that suddenly there were firms that could develop and manufacture modern technology. But military technology had made great strides in the 1980s and Russia had fallen way behind. Worse, the rapid growth of the Chinese economy meant a lot more money and new weapons for the Chinese military. This played a part in a more powerful China reviving old claims on Indian territory.

Suddenly buying Russian weapons was not good enough because the Russian stuff was not a lot better than what the Chinese were building themselves or buying from the Russians. India began to look West for weapons and redouble its efforts to develop weapons manufacturing capability. The Western stuff was more expensive and Western media tended to uncover the corruption that was so much a part of Indian weapons procurement. The Russians knew how to be discreet about the bribes and kickbacks. At the same time there was growing popular clamor in India to crack down on the corruption and the Western firms were much easier targets. This caused numerous delays in ordering new weapons from the West. Despite the delays, more and more foreign weapons were ordered, because the many state controlled weapons firms were unable to develop and manufacture what the military needed and were often a decade or more behind in contracts they already had.

Russia still supplies 75 percent of Indian weapons imports, while America only provides seven percent. Many Western arms firms are not willing to meet Indian demands for technology transfer and manufacturing licenses or the frequent hassles with corruption and a paranoid Indian media that often considers the West the enemy. There is also a problem with trust. The corruption, sense of victimization and entitlement in India means Western firms cannot trust the Indians to adhere to agreements about honoring Western patents and trade secrets. This is less of a problem with the Russians who are as corrupt as the Indians and have second-rate tech that is often not worth stealing. Meanwhile China has, in the last decade been importing fewer Russian weapons and exporting a lot more of its own. India is still struggling to find foreign customers for its weapons.

 


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