Policy Changes Spur Indian Private Military Contractor Expansion

Policy Changes Spur Indian Private Military Contractor Expansion

Prime Minister Narendra Modi’s commitment to partner with local service providers wherever possible may be a “golden goose” for Mumbai-based Larsen & Toubro, according to the firm’s defense business chief Jayant Patil.

Emboldened by a $700 million contract award in May of 2017, the firm says it will bid on over $28 billion in contracts over the next several years. Larsen has something of a head start over some competitor firms, since the company has been doing business in India since the 1980s and therefore has considerable experience and infrastructure. While many private military contractors looking to make headway in India face an uphill climb, due to an overall lack of infrastructure and the military’s penchant for foreign talent, Larsen’s share prices have increased 27% this year alone.

The emphasis comes along with a massive military buildup, as Modi has said he will spend an additional $250 billion on defense projects by 2025. Tensions are high between India and both of its large northern neighbors (Pakistan and China). Modi may also want to change India’s image as a defense importer, as the country has been atop the Stockholm International Peace Research Institute’s list of the world’s largest defense importers since 2010.

The Situation in South Asia

Tensions between India and Pakistan have always been rather high since the British left South Asia in 1948, but at this time, they are even higher than normal.

Recently, Islamabad accused New Delhi of repeatedly violating a 2003 cease fire along a LoC (line of control) that extends over most of the disputed boundary between the two nations. In fact, according to the Pakistan Foreign Office, India has violated this cease-fire over 700 times this year alone, killing 29 civilians, including a 55-year-old man slain in the Kotera Sector on August 29.

The foreign office blasted India for “indulg[ing] in ceasefire violations,” a policy that “is indeed deplorable and contrary to human dignity and international human rights and humanitarian laws.” India denied all the allegations.

Things between China and India are not much better. In August of 2017, a weeks-long military standoff between the two countries finally ended along the China-Bhutan border (Bhutan is a close Indian ally). To lower tensions in the long-running dispute, both China and Bhutan had agreed not to pursue development in the contested area. When Chinese bulldozers showed up, allegedly to construct a road in the disputed zone, India sent troops.

Although both sides backed down as a BRICS (Brazil, Russia, India, China, and South Africa) economic summit loomed in Fujian, the tension is probably not over yet, as Chinese officials said they would continue to garrison the area and build a road “in accordance with the situation on the ground.”

U.S. Contractors in India

The rising regional tensions, coupled with the domestic private defense industry’s need for a jump start, should mean that India should be fertile ground for U.S. private military contractors over the next several years.

Many front-line contractors are former servicemembers who are both highly trained and have combat experience in modern warfare. These individuals could give Indian forces the edge they need in a future conflict with Pakistan or China, while also serving as a deterrent to precisely that sort of activity.

Furthermore, many private military contractors are adept at training because they already filled these roles in Iraq, Afghanistan, and elsewhere. Such training will be especially valuable as India expands its defense hardware over the next several years because many modern warships have almost as many electronic weapons and countermeasures as they do guns and bombs.

Injury Compensation

The Defense Base Act provides workers’ compensation insurance not only for private military contractors stationed at American overseas military installations, but also for contractors who work for some sympathetic foreign governments who happen to have a contract with the US Government. Given the presence of Diego Garcia, an important U.S. base, in the Indian Ocean, as well as India’s longstanding animus against Pakistan, a country that is rapidly falling out of favor in Washington as the Global War on Terror continues, New Delhi arguably qualifies as sympathetic. In fact, one would be hard pressed to find a nation outside Western Europe that is more sympathetic to the United States.

Much of this compensation is in the form of medical expenses, which can easily be tens or even hundreds of thousands of dollars, when considering all the levels of care often required, from emergency room visits through vocational rehabilitation.

If they partner with attorneys straightaway, most injured contractors never see medical bills. That is because an attorney will notify the provider that a lawsuit is pending, and in the end, the insurance company usually pays the providers directly. The victims are not financially responsible for any unpaid costs thereafter.

Under the DBA, most injured contractors can choose their own doctors.

For more information about the benefits available under the DBA, contact Barnett, Lerner, Karsen & Frankel.