India Drops Fighter Jet Deal, Cites Empty Coffers As Reason

India Drops Fighter Jet Deal, Cites Empty Coffers As Reason

India Drops Fighter Jet Deal, Cites Empty Coffers As Reason

New Delhi: India’s military has postponed until the next financial year a plan to buy 126 fighter planes from France’s Dassault Aviation, the defence minister said on Thursday.

New Delhi had picked the Rafale fighters for exclusive negotiations in January 2012 and had been expected to finalise the deal, estimated at $15 billion, by the end of March.

But negotiations to buy 18 planes off-the-shelf and build the rest in India have slowed and will stretch into the following fiscal year, defence minister AK Antony told a news conference at a defence sector trade fair.

The military, the world’s biggest arms importer for three years running, has already spent 92 percent of its defence capital budget for this year, he said.

“Major procurement can only be possible in the next financial year. There is no money left,” Antony said. The country is due to hold elections by May and a new government is expected to be installed the following month.

India is in the midst of a $100 billion defence modernisation programme to replace Soviet-era planes and tanks, and narrow the gap with China.

But the defence upgrade programme has moved slowly like other major projects under the current government and partly because of Antony’s insistence on transparency and integrity in the defence procurement process, long dogged by allegations of kickbacks.

Last month, Antony’s office cancelled a $560 million euro deal with AgustaWestland for 12 helicopters after allegations were made that bribes had been paid to middlemen to secure the contract.

India chose the Rafale after a bidding contest against the Eurofighter Typhoon aircraft, made by a consortium involving Airbus Group, Finmeccanica and BAE Systems.

Dassault Aviation’s chief executive, Eric Trappier, said in December that he was optimistic about finalising the fighter jet deal within a few months, though he was unsure whether it would be sealed before or after the national election.

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