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Indian arms fair attracts global companies
The world's biggest armaments companies are making a beeline for a defence exhibition that begins in New Delhi next week.
The world's biggest armaments companies are making a beeline for a defence exhibition that begins in New Delhi next week, drawn by India's emergence as one of the largest buyers of hi-tech weaponry.
The fourth edition of Defexpo India beginning on Tuesday will be dominated by defence majors from the US, all with an eye on several big-ticket arms purchase deals that India is likely to finalise in the future.
So large is the American presence at the fair that Russia, which has supplied almost 75 percent of the arsenal of India's armed forces for decades, has been nudged to the third spot at Defexpo 2006, behind the US and Israel.
Lockheed Martin, Raytheon, Boeing, Bell Helicopters, DCN, Thales, Rolls Royce, Israel Aircraft Industries, Elbit and Rosoboronexport are among the more than 400 companies from 29 countries that will participate in the four-day event.
And while no deals are likely to be finalised during the fair, experts say the interaction it will facilitate will help firm up purchases in the coming years, worth millions of dollars.
"Nobody will come here unless he sees the market opportunities," said Wing Commander Rajesh Dhingra, joint director with the Defence Exhibition Organisation, which is organising the event along with the Confederation of Indian Industry.
"The manufacturers are attracted by the size of the market, and they are also looking at forging joint ventures for technology transfers and outsourcing, especially under the offset clause which necessitates a tie up with Indian firms," Dhingra said.
According to a report by the US Congressional Research Service, India was the largest arms purchaser among developing nations in 2004, inking deals worth $5.7 billion, higher than Saudi Arabia ($2.9 billion) and China ($2.2 billion).
Last year, India signed its largest-ever individual defence deal worth $3.5 billion to build six Scorpene submarines using technology and know-how provided by France's DCN in December 2005, it concluded a contract of over $500 million with Russia to buy Smerch multiple rocket launchers.
India is now in the market for 126 combat jets and has also said it intends to buy scores of helicopters, transport aircraft and medium ships that would help it respond to natural disasters.
Under new arms purchase guidelines, however, all contracts of over Rs.6 billion ($136 million) have an offset clause, whereby foreign firms will have to source components worth 30 percent of the total value of the deal from India.
And it is here, said Dhingra, that Defexpo could play a key role in helping forge partnerships.
"India's defence market has been opened up recently but private firms need to make substantial capital expenditure (to enter the defence sector). Besides it takes a lot of time, effort and money to attend foreign fairs," he pointed out.
"On the other hand, Defexpo provides a good platform to Indian firms as they can participate for a fee which is 60 to 70 per cent less than that for foreign exhibitors."
This year's edition of Defexpo, a biennial event first organised in 1999, marks a growth of 40 per cent in participants over 2004. The total number now is 410, including 212 foreign and 198 Indian companies.
Defexpo 2006 will also be attended by official delegations from 40 countries, including eight teams led by ministers.
Lord Drayson, the minister for defence procurement, will head the British team. The US delegation will be led by Richard Millies, deputy director of the Defence Security Cooperation Agency, which oversees all arms sales.
