India Intelligence Report
NDA Alleges Corruption in Scorpene Deal

The Opposition National Democratic Alliance (NDA) accused the Government of hiding a major defense scandal involving the USD 3.5 billion deals to buy Scorpene submarines. They charged the Government with violating domestic laws by allowing middlemen to take a 4% commission of USD 175 million, corruption that involved a Congress leader’s son in the deal, and the presence of a “lady” and a Congress treasurer during negotiations. Using an article by Outlook accusing the Government of corruption, they went on to name the beneficiary of the deal—Abhishek Verma, son of a prominent Congressman and a Rajya Sabha member.

Ever since the Bofors scandal  that involved a former Prime Minister from the Congress Party, Defense deals in India have been plagued by accusations of scandals, corruption, nepotism, and insider benefits. After the Bofors deal consumed the Congress Government, subsequent inept Governments led by inept leaders such as V.P. Singh and Chandrasekhar bankrupted the country. The economic reforms initiated in 1991 by the present Prime Minister turned India into an economic miracle.


However, no such effort was made into creating a strong process procurement process that would further the interest of the country and keep defense procurement outside the ambit of political bickering or personal financial gain. The major losers of this impasse were the Air force and Navy. The Air force could not upgrade its ageing fleet, get jet trainer train new pilots, and plan for a new age conflict. The Navy, frequently treated as a stepchild just a step above the Coast Guard, could not replace its aircraft carrier INS Vikrant, build a blue water navy, or upgrade its submarine fleet. The Army was only marginally successful in skirting such large-scale disaster primarily because of its constant engagement with terrorism. During the Kargil War, India had to swallow its pride to obtain shells to fire from its Bofors Artillery guns.

The present scandal comes at a very bad time for India. Several long pending orders such as a 126 fighter aircraft deal is pending, small but crucial orders needed for the special forces from Israel are delayed, and China has just hiked its defense budget by close to 15%. It might have been better for the NDA to have raised a transparency and reform issue and insist that India hold back a portion of the contract back pending investigation. Asking for the deal to be scrapped at this late stage means it sets the clock back where the Navy has to raise a new tender, invite quotes, evaluate quotes, etc. In any case, most commissions and investigations in India always end up absolving those who have been accused.