Aborted defence deal underlines India's procurement problem

  India’s decision to cancel a $740-million helicopter contract with Italian-owned AgustaWestland last week added to an already long list of failed defence deals which have left the military short of crucial equipment.

The deal to supply 12 transport helicopters, which were to ferry India's top-most leaders, was signed in February 2010, but was terminated last week after an investigation in Italy in 2013 brought to light alleged bribery.

Italian authorities arrested Giuseppe Orsi, the chairman of AgustaWestland's Italian parent company Finmeccanica, while India's ex-air force chief S.P. Tyagi is under investigation in New Delhi.

Graft allegations in India's big-ticket defence imports have scuppered other deals in the recent past, stretching back to the 1987 Bofors artillery guns scandal and another deal for 197 helicopters in 2007.

Rahul Bedi, for Jane's Defence Weekly, blames “corruption, lack of decision making and excessive bureaucracy” as the three main problems that block India's military purchases.

After the Bofors debacle, India's artillery upgrade hit another air pocket in 2009 when the defence ministry blacklisted seven firms including front-runners Singapore Technologies and state-run Israeli Military Industries over corruption concerns.

The contract for front-line helicopters capable of operating at high altitude which was cancelled in 2007 has still not been re-issued.

At the same time, India's military needs are growing, with tensions on its western border with Pakistan, an increasingly assertive China to the north and growing ambitions for India's role in world affairs.

In March 2012 then army chief V.K. Singh sent a letter to Prime Minister Manmohan Singh revealing in embarrassing detail alleged procurement deficiencies.

“Tanks are out of ammunition, the air defence is obsolete and infantry is short of critical weapons,” Singh wrote, later revealing that he had once been offered a bribe of $2.8 million for a contract.

A report in India's The Hindu newspaper, quoting top personal security officers, said that the cancellation of the AgustaWestland deal “could endanger the country's highest officials”.