In any overseas defence purchase there are offsets, meaning that 30% or so of the amount being spent overseas was to be ploughed back into the Indian economy for procurement. The babu’s and the overseas Defence contractors found an ingenious way of getting their bribes into India by use of these entitlements which were mostly routed as Software imports. The bribes in the chopper deal in particular were routed via IDS Infotech. What the value of the following piece of code “for i=1 to 10 print “haha”; “ – it could be ten million – any takers?
China’s Arms Exports
In moving one step forward , some change in rules has been proposed. Software and consultancy has been removed from the list of valid offsets. Contracts will go to overseas vendors as a last resort and that a minimum of 50% has to be indigenous. However, I am very skeptical that this will ever go through. We are talking about foreign contracts for submarines, for aircraft carriers, for rifles, for large transportation planes, the list goes on. We recently spent $4 billion on transportation carriers with foreign exporters salivating for future allocations of one hundred and seventy five billion to be precise (and just for aircraft). The rules for indigenous procurement may exist , but will either be overlooked or not followed with some excuses given – the potential for profit is to high – the foreign suppliers will show no respite to achieving their goals.
And while we have made it to the top of the list as an importer , China our neighbour has been making it to the top of the list as an exporter. Where is the logic in this. Being an arms exporter gives China leverage, it can spend far less and accomplish far more in manufacturing and technology and also boost the bottom line of the economy – Why Are We Missing This Important Fact ? We should strive for the same. We do not need arms exporting countries to assure us of our security – this is ridiculous , this is a new form of British Raj/dependence on others.
Privatize Our Defence Companies
Lets do some real reforms – let us privatize our arms companies – they can hire the best , set up state of the art manufacturing facilities in the country and give us self-reliance. This is the part of the reform process that is still remaining. We need to stop thinking about Defence imports and try to be instead an exporter in the field of Defence. Band aiding our defence establishments will not work. As Ajit Singh said government should not be in the services field at all. Similarly government should not be in the field of manufacturing either. Have you seen China rely on imports for its Defence. Having an indigenous (and high tech) defence manufacturing establishment is essential. The government should sell the majority stake in each of these defence establishments to a consortium of entities and thereby having these companies run as professional board managed companies where merit and determination are rewarded (a different culture than the one pervasive in these institutes today) and where corruption is removed.
Transparency international UK, has given India a D+ in anti-corruption (meaning that defence deals are full of corruption) – Shameful !