India yesterday signed an agreement to buy 310 Russian T-90 main battle tanks for over $800 million for deployment against the T-80 tanks Pakistan acquired from Ukraine three years ago, leading to an arms race between the neighbouring nuclear rivals.
Military sources said Pakistan was already negotiating for another 200 T-80s, in addition to the 300 it had acquired earlier to achieve parity with its larger neighbour.
Under the Russia-India deal Moscow will deliver 124 tanks in completed form with the remainder locally assembled in southern Tamil Nadu state.
Indian economists said the Hindu nationalist led government was spending too much on military purchases and not enough on overall development. "The government seems to have cut developmental spending by over 10 per cent this financial year," said Dr Wilima Wadhwa, of the Indian Statistical Institute in Delhi.
India is also closing negotiations with Britain for around 66 Hawk advanced jet trainers for over $1.6 billion and with Russia for a disused aircraft carrier which will cost over $750 million to refit and another $1.2 billion for fighters for its air group. The navy is also building an aircraft carrier locally while the air force and army are finalising imports worth billions of dollars.
Finance ministry officials conceded the government was financially stretched, with vast resources needed to rebuild Gujarat state devastated by an earthquake last month. Nearly 30,000 people died and property worth over £3.7 billion was destroyed. A 2 per cent tax has been imposed to help resurrect the devastated region.
