New Delhi / Bangalore: India will continue to selectively buy arms and aircraft from suppliers in the US and other countries—excluding Russia, with which it has an inter-government pact—through the foreign military sales, or FMS, route that bypasses competitive bidding, defence minister A.K. Antony said.
But the approval of such purchases rests on the discretion of the US government. Under the FMS process, the US government gives approval to firms such as Boeing Co. and Lockheed Martin Corp. to supply military planes and other equipment to overseas buyers in line with government-to-government agreements.
Although such equipment could be more expensive because it would be tied to market value in the absence of competitive bidding, the FMS route would help sidestep the tendering process, speeding up military modernization efforts.
Such deals will be “selective” and depend on the urgency with which the equipment is required by the military, Antony told Mint on the sidelines of the 2010 Defexpo in New Delhi on Monday.
As military relations with the US strengthen, India has in the past three years bought military hardware worth at least $5 billion (Rs23,100 crore) from American suppliers through the FMS route.
Boeing has won orders for 10 C-17 heavy-lift Globemaster planes and eight P-8I maritime patrol aircraft for the navy. Lockheed Martin has a contract for delivering six C-130J Super Hercules transport aircraft to the Indian Air Force beginning this year.
The Pentagon, the US military headquarters, has notified Congress of the possible sale of 145 lightweight towed Howitzers to India by UK-based BAE Systems Plc, which assembles the artillery pieces in the US with mainly American components.
“I think it will be a balance depending on the operational requirements and the urgency,” minister of state for defence M.M. Pallam Raju said.
“The FMS sometimes becomes (an) optional route. We have been trying to get the guns for so long—the artillery guns—and every time something or the other happens. Suddenly it results in this. So if we feel there is a capability that we seek and this is a better option, we go by it,” he said.
US defence firms have been the biggest beneficiaries of such inter-government agreements with India in recent years.
India in the past built its inventory of planes, tanks and ships by signing purchase pacts with its old ally Russia, which has more recently won deals for supplying helicopters and the joint development of multi-role transport aircraft and fifth-generation fighter aircraft.
Analysts say the FMS route could be an option for the acquisition of weapons and equipment for urgent needs of the military, but it should be an exception rather than the rule.
“If you don’t have competitive bidding for projects, you will not see vibrant participation of the Indian defence industry. This will in turn affect the broadening of the Indian defence industrial base,” said Ratan Shrivastava, director for aerospace and defence at the consultancy Frost and Sullivan.
Pallam Raju, however, says that there is no hard and fast rule for such transactions. “It’s not a question of trying to avoid the tendering process and all that. But you understand that there is an urgency to catch up in terms of our modernization efforts,” he added.
“It’s a requirement that is projected by the armed forces and then we know that as of now any procurement takes two to three years. But if something goes wrong in between, then cost of delay is much more...,” he said.