Defense Contractors Circle India

Western defense companies are hoping U.S. plans for an agreement with India will streamline defense procurements and open up India for the business of modernizing their military. So says an article in the Wall Street Journal:

"In all, India plans to spend between $50 billion and $55 billion on military equipment over the next five years to turn its largely Soviet-era armed forces into a modern fighting machine."

Much of this will be in large programs like fighter jets. However, since India has set its offset policy at 30% for orders over $62M (3B rupees), there is likely to be prolonged investment within India and perhaps more in its budding private sector defense firms. This would be in line with the Indian government's push to promote development of its own manufacturing base rather than increasing imports.

On this note, the WSJ points out that two big joint ventures have recently been announced with BAE. Mahindra Defense Systems will partner with BAE to produce MRAP-like vehicles. And state-owned Hindustan Aeronautics will also work with BAE (under license) to build the Hawk 132 Advanced Trainer Jet.