Indian cancellation of defense equipment orders hurts investor sentiment: Experts

A tender was withdrawn for short-range surface-to-air missiles, with Israel’s SPYDER system having been the front-runner. Supplied
Updated 18 June 2018
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Indian cancellation of defense equipment orders hurts investor sentiment: Experts

  • New Delhi scrapped a $500 million deal for Israel’s Spike Anti-Tank Guided Missile. Israel had agreed to transfer the technology to India, and had set up a factory in a venture with an Indian company
  • Modi wants the country to decrease its reliance on foreign firms, reduce its import bill and manufacture equipment in-house

NEW DELHI: The Indian government’s penchant for canceling or withdrawing tenders for defense equipment at the last minute is likely to hurt investor confidence in the country, experts said on Sunday.
New Delhi called off a $9 billion deal to co-develop with Russia a next-generation fighter aircraft, after the state-owned Defense Research and Development Organization (DRDO) said it would do the job in-house, Indian media reported this week.
Under the deal, a significant amount of the research would have been carried out in India. Russia had agreed to tailor the aircraft to Indian needs, and was to hand over all the technology, the Economic Times reported.
India is the world’s largest importer of defense equipment, and imports at least 90 percent of its equipment, including parts for assembly.
The government of Prime Minister Narendra Modi wants the country to decrease its reliance on foreign firms, reduce its import bill and manufacture equipment in-house.
But India lacks much of the high-end technology needed for such equipment, which is why deals where foreign partners agree to share technology are useful for its long-term plans, experts say.
When such deals are canceled, “it greatly reduces confidence in India,” said Saurabh Joshi, editor of StratPost Media Pvt Ltd., a defense news website.
“We can’t willy-nilly… accept arguments that a particular equipment can be developed and produced indigenously before such tenders are withdrawn,” he added.
“There should be an adequate test to develop and produce indigenously. Otherwise, we’re simply postponing an acquisition process by 10 to 15 years, and it’s the armed forces that have to go without critical equipment until then.”
Experts say one reason for the government canceling orders could be a lack of funds. The Russian deal is not the only one to be jettisoned recently.
New Delhi scrapped a $500 million deal for Israel’s Spike Anti-Tank Guided Missile. Israel had agreed to transfer the technology to India, and had set up a factory in a venture with an Indian company. The reason given for the cancellation was the same: To develop the missiles indigenously.
A tender was also withdrawn for short-range surface-to-air missiles, with Israel’s SPYDER system having been the front-runner, experts said.
On average, it takes a tender at least six years to go through the various steps before the final purchase order can be placed.
Any company that loses a bid has to account for that time and investment to its head office and its board, Joshi said.


Brazilian police arrest fugitive US has linked to Hezbollah

Updated 12 min 40 sec ago
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Brazilian police arrest fugitive US has linked to Hezbollah

SAO PAULO: Brazilian police on Friday arrested a fugitive sought in Paraguay who is accused by US officials of belonging to Lebanon's Hezbollah militia and of being a key financier of terrorism.
Police took Assad Ahmad Barakat into custody in the border city of Foz do Iguacu, which is home to the famous Iguazu Falls and sits where Brazil, Argentina and Paraguay meet.
Authorities in Paraguay are seeking Barakat on allegations of false representation, police said, and Brazil's Supreme Court authorized his arrest earlier this month. The Brazilian federal prosecutor's office said in a statement that Barakat's case meets the requirements for an arrest with a view to extradition.
In Paraguay, Barakat is accused of presenting a declaration of incorrect nationality and omitting information about the loss of nationality, the prosecutors' statement said. Barakat was born in Lebanon but has lived in South America for years.
Prosecutors said they had information that Barakat applied for refugee status in Brazil when he learned of Paraguay's arrest warrant, but that only the recognition of refugee status would prevent his extradition, which was not the case here.
In 2004, the US Treasury Department accused Barakat of serving as a treasurer for Hezbollah, which it considers a terrorist organization, and ordered American banks to freeze any of his assets found in the United States. At the time, Barakat was serving time in a Paraguayan prison for tax evasion. Two years later it added several of his associates to its watchlist, on which Barakat remains.
Brazilian police said Argentine authorities have accused associates of Barakat of laundering $10 million in a scheme in casinos, and they have frozen the group's assets.
Barakat was extradited from Brazil to Paraguay in 2003 and was convicted of tax evasion. He returned to live in Brazil in 2008 after he was released from prison, police said.