However, this investment situation may soon change. First, analysts expect an increase in the 26 percent limit on foreign capital. In other words, investors, or arms suppliers, will set up in India a joint venture that will carry out the orders they have received -- but on the spot rather than abroad.

Second, the government is about to complete a list of private firms that will get equal rights with state companies. It is rumored that the list will include such industrial giants as Larsen & Toubro and companies belonging to Godrej, Tata and Mahindra & Mahindra.

However, Secretary for Defense Production Shri Pradeep Kumar admitted last week that approval of this list was being delayed because of resistance on behalf of some state companies.

But the government has already promised help to foreign firms that are rushing around with bags of money in search of local partners. There is no doubt that they will implement the new requirements and receive licenses.

Some private companies have been working for the defense industry. Larsen & Tourbo, for example, is building a secret nuclear-powered submarine for India, and is prepared to assemble aircraft under license, that is to do what the state-owned Hindustan Aeronautics Limited -- HAL -- is now doing.

Larsen & Toubro and Strategic Electronics Division from the Tata Power Corp. are carrying out a Defense Ministry order for the production of multiple launch rocket systems. The tractor building company Mahindra & Mahindra has built an armored cross-country vehicle in just two years.

The Defense Research & Development Organization is going to acquire a new role of a scientific center. It will also be the main distributor of orders to private companies.

To sum up, the companies that want to sell arms to India should take its new requirements into account. The forthcoming revolutionary changes will call for a new approach and more flexibility. Indian partners in the arms market need to learn how to come to terms with the local players, develop production lines, find the best ways of implementing offset commitments and respect the higher ambitions of their Indian partners.

Russia, which has an impressive display at the shows, enjoys obvious advantages in this respect because India has been testing its new policy primarily in cooperation with Moscow. But this alone does not guarantee Russia's victories at all tenders for defense orders.

(Yevgeny Bezeka is RIA Novosti's correspondent in India. This article is reprinted by permission of RIA Novosti. The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.)

(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

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