Acceleration and simplification of arms acquisition procedures in India

The arms market in India, although it is today the largest in the world, is also the most complicated, and many defense companies have broken their bones in the Indian administrative and political maze. But since the legislative elections this spring, and the great victory of Prime Minister Modi whose party obtained an absolute majority in parliament, the new Minister of Defense, Rajnath Singh, has undertaken to quickly simplify, strengthen and accelerate the procedures acquisition of Defense equipment, particularly imports. Because in fact, despite a substantial budget, the Indian armies are struggling to modernize, while its neighbors, such as Pakistan and China, are modernizing rapidly, creating a very problematic power gradient for New Delhi.

This is why, for several weeks, announcements of contract awards and changes to procedures have been coming one after the other. Thus, last week, the Indian government, nothing more and nothing less than removed import taxes on Defense equipment. A common sense measure, since these taxes were paid by the State for public finances, generating an additional administrative layer without added value. An example which could inspire European legislators who continue to believe that arms acquisitions must be subject to VAT. This simple measure will free up additional resources from the Ministry of Defense, without impacting the budget breakdown for the Indian State.

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And in fact, announcements concerning acquisition programs have intensified since then. This weekend, the acquisition program for 56 C295 European transport aircraft from Airbus DS, for an amount exceeding €1,5 billion, was validated and passed into administrative processing. The order for Israeli Spike anti-tank missiles was also validated, concomitantly with the opening of a program aimed at acquiring Excalibur 155mm extended-range precision shells from Raytheon and BAe, for the new M-777 howitzers. acquired this year by the Indian Army. On the naval side, no less than 6 programs for more than 30 vessels were launched in one week, covering everything from armed patrol boats to multi-purpose frigates.

With many French and European BITD companies being involved in the Indian Defense market, this paradigm shift will generate a surge in activity, and announcements, on this subject.

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