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Modi on shopping spree for weapons

NEW DELHI — Prime Minister Narendra Modi has cleared US$19 billion (S$25 billion) of arms procurement proposals since taking power in May, almost double India’s spending on weapons in the last fiscal year as he tries to modernise the country’s military.

NEW DELHI — Prime Minister Narendra Modi has cleared US$19 billion (S$25 billion) of arms procurement proposals since taking power in May, almost double India’s spending on weapons in the last fiscal year as he tries to modernise the country’s military.

The blitz of 41 approvals spans heavy guns to submarines as Mr Modi seeks to counter China’s rising military heft and take a firmer stance on border disputes with Pakistan. The vice-chief of the Indian Air Force has never seen anything like this pace from the nation’s Defence Acquisition Council.

“I don’t recall the council clearing these many ... procurement proposals within six months and in four meetings,” said Air Marshal R K Sharma, who has served in the air force for four decades. “The indication from the government is that this trend in decision-making will continue.”

The approvals add to Mr Modi’s other steps, such as allowing more foreign investment in defence and trying to overcome a history of graft scandals that slowed purchases. The changes are stirring interest: Larsen & Toubro, India’s largest engineering business, said Europe’s Airbus Group is assessing whether to boost its stake in their defence joint venture. Boeing is already looking for investment options.

In July, Mr Modi increased the limit on foreign-direct investment in defence to 49 per cent from 26 per cent.

That is part of a plan to stoke domestic production after India surpassed China in 2008-2012 to become the world’s largest importer of major conventional weapons. Mr Modi is also seeking to rely less on state-run firms, which have failed to help replace obsolete weapons.

Larsen & Toubro and Airbus Defence and Space set up their L&T Cassidian venture in 2011, focusing on products such as radar, avionics and electronic warfare. Larsen & Toubro holds 74 per cent and Airbus the rest.

Mr Sunny Guglani, a spokesman for the Indian aerospace unit of Airbus, said the company does not comment on speculation. Mr Yves Guillaume, the president for Airbus in India, said the nation’s push to improve its defences is encouraging.

BAE Systems, based in London, said the new government has given global defence companies reason to be optimistic. The rise in the investment cap “substantially increases the attractiveness of the Indian market as a place to transfer technology and develop know-how,” BAE’s India and South-east Asia managing director John Brosnan said.

Nuclear-armed India has approved 41 proposals at a cost of 1.2 trillion rupees (S$24.9 billion) since June, Defence Minister Manohar Parrikar told Parliament in New Delhi this month. Spending on defence equipment in the 12 months ended March 2014 was 669 billion rupees, he said.

The proposals include 190 billion rupees for submarines, a 158 billion-rupee purchase of artillery — the first acquisition of large-calibre guns since the 1980s — and a 32 billion-rupee deal to buy 8,356 Spike anti-tank guided missiles and 321 launchers from Rafael Advanced Defence Systems.

Among pending deals is a contract for 126 Rafale combat planes from Dassault Aviation SA for about US$11 billion, the world’s biggest order of fighter jets in about two decades.

Boeing is close to winning a US$2.5 billion deal to supply 22 Apache helicopters and 15 Chinook heavy-lift transport aircraft to the Indian Air Force. Airbus is bidding with Tata Sons to provide C295 transport aircraft. BLOOMBERG

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