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A tender was withdrawn for short-range surface-to-air missiles, with Israel’s SPYDER system having been the front-runner.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accept arguments that a particular equipment can be developed and produced indigenously before such tenders are withdrawn,” he added.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.


Cyclone kills 33 in India with thousands in relief camps

The aftermath of cyclone Gaja is seen in Tamil Nadu, India November 16, 2018 in this picture obtained from social media. (REUTERS)
Updated 36 min 59 sec ago
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Cyclone kills 33 in India with thousands in relief camps

  • Most deaths were caused by flooding, house collapses and electrocution

NEW DELHI: A powerful cyclone in southern India has killed at least 33 people, caused massive damage to homes and roads and drove tens of thousands of people into relief camps, officials said.
India’s navy assigned two ships and a helicopter for relief work as state authorities rushed drinking water, food and paramedics to nearly 82,000 people who took shelter in more than 400 state-run camps.
They were evacuated from areas in the path of Cyclone Gaja, which struck six districts of Tamil Nadu state on Friday with heavy rains and winds that reached 90 kilometers (55 miles) per hour.
Rescuers found 13 bodies Friday and an additional 20 on Saturday, said Edappadi Palaniswami, the state’s top elected official. Most deaths were caused by flooding, house collapses and electrocution.
The cyclone uprooted 30,000 electricity poles and more than 100,000 trees, he said. Nearly 10,000 workers were trying to restore electricity supply to the worst-hit areas, he said.
Palaniswami said a large number of goats, deer and wild animals had also perished in the flooding over the past two days.
Coconut trees over thousands of acres (hectares) of farmland have been uprooted, according to Tamil Nadu Vivasayigal Sangam, a farmers’ organization.
Tamil Nadu state is prone to cyclones that develop in the Bay of Bengal.