Ministry Amends Rules for Foreign Arms Companies

November 12, 2009 Posted by India Briefing Reading Time: 2 minutes

Nov. 12- India’s Ministry of Defense has changed rules that could allow foreign arms companies blacklisted pending a bribery case to join tests aimed at modernizing the army.

The ministry banned local and foreign firms in June based on a suspected bribery charge on the former chief of the Ordinance Factories’ Board, Sudipta Ghosh. The new rules could pave the way for blacklisted arms companies to showcase their equipment although they will not be allowed to finalize contracts pending the investigation says The Telegraph.

The Indian Armed Forces is the third largest in the world in terms of size with an active force of 1,414,000 people but severely lacks in modern equipment. The Indian Army for one has not bought heavy artillery in 22 years. Past attempts to equip the military have been delayed so far.

The seven blacklisted companies include: Singapore Technologies, Israeli Military Industries, BVT, Media Architects, and Indian firms T.S. Kishan and Company, R.K. Machine Tools and HYT Engineering.

There are huge opportunities for arms companies to do business in India. The country has the 10th largest expenditure on armed forces in the world and its 2009 budget alone is worth US$32.7 billion. India has been working towards modernizing its defense system since 2007 with spending on new weapons forecast to reach US$50 to US$55 billion by 2012.

India has been made acutely aware of its military capabilities because of ongoing border disputes with regional rivals Pakistan and China. However the country has been criticized for allotting too much of its budget on military expenses, forsaking more spending on other necessities like education and health care for its citizens.