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Arms
Makers See Great Potential in India Market
By Saritha Rai
The New York Times
February 12, 2003
BANGALORE,
India, Feb. 11 — Leading military equipment makers from around the
globe are aggressively promoting their products to India's huge
defense market, with its $100 billion in expected spending in the next
decade.
Scores
of companies converged in Bangalore last week for Aero India 2003, a
trade show held every two years for aircraft and military companies.
They included companies from the United States, Britain, France,
Russia and Israel — countries that dominate the global military
supplies trade. American companies had missed the last two shows
because of sanctions imposed by President Clinton. Those sanctions
have been lifted by President Bush.
Manufacturers
are also pursuing contracts to supply other Asian nations with combat
aircraft. According to news reports in the region, Singapore is
negotiating to take part in developing the American-led F-35 Joint
Strike Fighter and to buy several dozen of the jets, while Malaysia is
talking to Boeing and Sukhoi of Russia about new orders.
The
most aggressive battle at the trade show here was among military
aircraft makers from Britain, Russia and the United States over a
multibillion-dollar order to supply 66 advanced jet trainers to the
Indian military. The Indian defense minister, George Fernandes,
indicated at the show that India's government was about to make a
final decision on the purchase.
The
jets under consideration include the Hawk ZJ100 from BAE Systems of
Britain, the MIG-AT from Russia and the L159B trainer made by the
Czech state-run company Aero Vodochody, which is 35 percent owned by
the Boeing Company. Lockheed Martin indicated that it might bid with
its T-50 being co-developed with South Korea. Russia, which has been
India's leading supplier of military equipment, holds more than half
of the Indian market.
"There
aren't any large markets for American defense companies to sell to,
bar India and China," said Air Marshal Philip Rajkumar, director
of the Aeronautical Development Agency, an autonomous body under
India's defense department that is developing the light combat
aircraft. "With Americans wary of China, India really is the only
market."
Given
India's recent hostilities with Pakistan, the country is equipping
itself for both conventional and nuclear warfare, with a substantial
military budget. This year, for instance, India has allotted 650
billion rupees ($17 billion) for military spending. "The
attractive market is making companies push very hard," said Dr.
V. S. Arunachalam, former military adviser to the Indian government
and now a professor at the Robotics Institute at Carnegie Mellon
University in Pittsburgh.
India
imported military equipment worth $7.2 billion from 1998 to 2001,
second only to the United Arab Emirates, which bought $10.8 billion in
that period. In the next decade, India is expected to be the world's
largest importer.
There
is considerable competition to fill India's civilian aircraft needs as
well, with the world's two main builders of passenger jets, Airbus
Industrie, which is based in France, and Boeing vying for India's
growing passenger airline market.
Representatives
of the two companies attended last week's trade show here not only to
market their planes but to lobby the Indian government, which runs the
country's two biggest airlines, Indian Airlines and Air India. Both
airlines are contemplating large purchases. Indian Airlines and Airbus
agreed to a $2.1 billion, 43-plane deal in March but have not yet
received government approval.
The
French prime minister, Jean-Pierre Raffarin, and the British defense
procurement minister, Lord Bach, led their countries' delegations.
They also lobbied for military orders, hoping to take market share
from Russia.
United
States foreign policy has until recently restricted sales to India by
American makers of military hardware, because the country had
developed nuclear weapons. But relations between the countries have
shifted significantly. Restrictions on supplying military equipment
have been lifted; the two nations even held joint military exercises
last year.
According
to an Indian military official, India has a wish list of equipment
from the United States, including high-altitude aircraft made by
Lockheed Martin, Lockheed's precision-guided munitions or smart bombs,
and surveillance equipment from Raytheon and other manufacturers.
"But
anything we want from the United States goes through a very complex
process," said Dr. Arunachalam, the Carnegie Mellon professor.
"Between most countries, trade improves politics. But with the
case of the U.S. and India, policy guides trade and technology
transfer."
Other
countries are also determined not to waste any sales opportunities.
Russia hopes to sell India its Admiral Gorshkov aircraft carrier this
year, as well as fighter jets, anti-submarine helicopters, long-range
bombers and multiple-launching rocket systems. France is negotiating
to sell 6 Scorpene submarines and 130 Mirage-2000H fighters. Israel is
offering its Phalcon early-warning radar systems.
American
makers of military equipment have been eager to join the race. The
first major sale has already been struck, with Raytheon signing a
$142.4 million deal to supply AN/TPQ-37 weapon-locating radars. The
company presented its missile defense and naval systems at the
Bangalore trade show.
"The
potential in this market is significant," said Dennys S. Plessas,
a vice president of Lockheed Martin, which wants to sell its C-130J
Hercules heavy-lift aircraft and the P-3 Orion maritime reconnaissance
aircraft to India. Lockheed is also offering its F-16 fighters to
replace India's aged MIG-21 fighter jets, in competition with the
French Mirage-2000 jets.
And
many Indian officials say the American companies are likely to get
their share.
"The
door between India and the United States was firmly closed, but it is
now beginning to open," said Dr. V. K. Atre, scientific adviser
to India's defense minister. "By the end of 2003, there should be
a lot of positive movement." |