Murphy's Law: India Fights The Facts

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May 31, 2016: Indian Air Force officers in charge of maintaining and upgrading military aircraft were surprised in April 2016 when, without warning, a new government tax rule went into effect that added millions of dollars a year to the cost of imported aircraft and components. The air force, the army and navy are now trying to calculate what the new rule will cost them. The old tax rule gave all military equipment an exemption from import duties (taxes) while the new rule requires that the government give permission for each shipment. Unless the old rules can be reinstated or the new rules not applied to all shipments already on order or sitting in warehouses waiting to enter the country, the Indian Air Force will see dozens of warplanes grounded for lack of parts and new ones blocked from entering India until the new taxes are paid. Both solutions are going to take time and then there is the task finding out who did this and why.

Worldwide it is common to not tax imported military equipment that is bought by the government. But for some reason some bureaucrats in the Indian government thought it was a good idea to do it differently. Given the history of the Indian government, and especially the military procurement officials, the reason for this probably had something to do with corruption, revenge or just stupidity. It appears that this is all about a dispute between officials at the Ministry of Defense and the Ministry of Finance. Also part of all this is the ongoing dispute over importing foreign weapons and components because Indian firms cannot do it. The truth in this case, as in so many similar ones, may never be known.

 


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