Governance Now Visionary Talks Series

Is India succumbing to US on defence deals?

Big deals with European companies cancelled mysteriously

GN Bureau | February 22, 2010

File photo of Defence Minister A K Antony in the cockpit of MiG 29K
File photo of Defence Minister A K Antony in the cockpit of MiG 29K

Is government under pressure from the United States to cancel fat defence orders to the European companies and go for purchases from the American firms?

The question is being raised after Defence Minister A K Antony recently struck down a $1.6 billion order bagged by the European Aeronautic Defence and Space Company (EADS) for supply of the Airbus transport planes to the Indian Air Force (IAF).

This was yet another order legitimately won by an European defence company last year with IAF selecting the multi-role tanker transporter Airbus A330 after four years of labour, but it was cancelled by Antony without giving any reason.

Last year, a deal for 197 helicopters from Eurocopter, a French-German conglomeration, was similarly cancelled by Antony and his ministry gave a very dodgy financial argument.

Another decision to award a large tender for secured defence communication to Motorola, an American firm, over EADS, is also mired in red tape and secrecy, with no explanation coming forward from the defence ministry for dumping the winner to oblige an American firm.

Those in the IAF who laboured for four years to finally pick up Airbus A330 are disturbed over the defence minister using his red pen to strike down the contract. IAF sources say the choice of A330 over the Russian Ilyushin (IL86) was made on the basis of wanting a new generation product instead of going for an existing obsolete product. Though the price quoted by the Russian aircraft manufacturer was lower than that of A330, the IAF opted for the latter as it would cheaper on the total costlife-cycle cost over 30 years.

Defence analysts say there may not be a great conspiracy but there is certainly something wrong in the way the defence ministry is cancelling deals with the European companies despite winning the tenders and standing up to quality requirements of the Indian forces. They point out that concluded transactions between sovereign nations do not just get cancelled.

The questions are being raised as to whether the Manmohan Singh government is succumbing to the continued American pressure as a quid pro quo to the civilian nuclear deal. Or, are there some shadowy agents who are influencing the government's decisions?

Analysts say Antony cannot be blamed for cancellation of the concluded deals as he must be acting only on the advice of top ministry officials and hence they wonder if some of them have been compromised so much that there is a blatant rejection of anything that is not coming from either the United States or its crony Israel.

France President Sarkozy led a sustained and aggressive diplomatic campaign over the past couple of years to regain and revive the strategic relationship between Europe and India.

Analysts point out that unlike the United States, the European firms have always agreed for full transfer of technology (ToT) of the latest weaponry and that too with no strings attached and hence denial of opportunity to them is astounding.



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