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NEWS & COMMENTARY 2008 SPEAKERS 2007 2006 2005

Tuesday, January 31, 2006

India Vows to Upgrade Air Force, Calls for Joint Deals

AFP - Defense Minister Pranab Mukherjee urged global arms makers on Jan. 31 to enter joint military production ventures in India, as top companies showed off their latest hardware at an arms fair in New Delhi.

This event showcases our capabilities to deliver military product at competitive prices and we wish to strike mutually beneficial arrangements with friendly countries,� Mukherjee said, opening a four-day Defense Exposition.

Britain, France, Germany, Israel, South Korea, Russia and the United States are among 38 countries which have sent 420 of their leading arms manufacturers to the exposition.

India, which in 2004 emerged as Asia�s largest arms importer, is known to be shopping for 126 fighter jets and missile protection systems.

Experts say the deals are worth more than $8 billion and countries such as the U.S., Britain, Russia and Switzerland are leading contenders.

�Our defense production units have taken a market-friendly approach and offer an opportunity to bring in global technologies for joint production and export to third countries,� said Mukherjee, whose Congress party is credited with opening India�s market to competition.

�And today, 100 percent participation in Indian defense projects is possible,� the defense minister said.

India generally allows only 26 percent private equity in state-controlled sectors. But a 50-50 partnership between India and its largest military supplier Russia for the successful co-production of the supersonic cruise missile BrahMos marked a change in direction in the arms sector.

K.P. Singh, secretary of India�s defense procurement sector, told delegates from companies such as U.S.-based Raytheon, British Aerospace and French Thales that India offered the perfect environment for military partnerships.

�India has a well-established manufacturing base to make items ranging from aircraft to software products and a number of changes have been made in our policy to give greater freedom to the private sector to ensure they become global players,� Singh said.

Arun Bhgatram of Confederation of Indian Industries trade lobby also extolled the virtues of India�s defense sector.

�A conductive atmosphere backed by skilled workforce and technology now exists in India for fruitful joint ventures,� the industrialist said.

Mukherjee later told a news conference that New Delhi was actively working to replace its ageing fleet of military jets.

�... We have to phase out our ageing aircraft and also upgrade our inventory just like we are doing with the (Russian-built) Sukhoi-30s,� he said.

India�s mainstay MiG-21 aircraft are more than three decades old.

The country has in the past few years bought the Phalcon radar system from Israel for $1.1 billion, a used aircraft carrier from Russia for $1.5 billion and 66 Hawk jet trainer planes from Britain for $1.45 billion.

The domestic defense sector faces a severe technological shortfall, mainly due to international sanctions imposed because of India�s nuclear weapons program. These ban the transfer of technology with possible military applications from the West.

In the fiscal year ending March 31, the government raised its defense budget by 7.8 percent to 830 billion rupees ($19 billion).

The military budget accounts for 14 percent of the total budget and 2.96 percent of gross domestic product and Mukherjee said Tuesday it would remain below three percent.
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