Indian summer

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If there is a global credit crunch, someone forgot to tell India’s defence ministry. Other countries may be tightening their belts due to the ongoing global economic slowdown, but New Delhi continues with its procurements and tenders. And that is good news for the defence contractors.

Washington appears to be the prime beneficiary for now, with India providing further evidence of its increasingly closer ties with the USA after confirming a $2.1 billion order for eight Boeing P8-I maritime patrol aircraft. This comes a year after a $1 billion contract for six Lockheed Martin C-130J tactical transports, the first time that New Delhi had bought US military aircraft.

Several long-standing Indian requirements for fighters, military helicopters, aerial refuelling aircraft, and airborne early warning and control systems should be resolved in the coming years, and these will be worth several billon dollars for the contenders.

The big kahuna is a $10-12 billion contract for 126 multi-role combat aircraft, with the Boeing F/A-18E/F, Dassault Rafale, Eurofighter Typhoon, Lockheed Martin F-16, Saab Gripen and Sukhoi Su-35 in contention. Expect it to get dirty in the coming months as New Delhi completes technical evaluations and conducts flight tests.

Western European firms are making a strong fight in all of these tenders, but many observers are especially watching Russia’s moves very closely. The decades-old close defence relationship between Moscow and New Delhi has strained in recent months, but Russia has slowly been trying to mend the ties through its long-standing connections with India’s civil servants. It has no choice.

With all Western defence contractors facing tightening defence budgets at home, securing export orders has taken on even more importance. And this is especially true when the customer is a country like India, which appears to have a bottomless pit when it comes to funding its armed forces’ modernisation programme.

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