India Looks to Become Arms Supplier Instead of Buyer
by Idrees Ali April 18, 2015
India, long one of the world's biggest arms importers, wants to expand its own weapons industry and become a supplier to other nations. It's a move the United States supports for economic and strategic reasons.
But industry analysts who spoke to VOA believe that, despite some positive signs, India's reliance on arms imports is unlikely to change anytime soon.
Indian Prime Minister Narendra Modi recently pointed out that India imports nearly 60 percent of its defense needs. Over the past five years, India was the world's biggest arms importer, accounting for 15 percent of the world's weapon imports, according to a new report by the Stockholm International Peace Research Institute (SIPRI).
Modi is pushing for a "Made in India" policy whereby the country would become more self-sufficient in arms production.
Last year, in a speech aboard India's largest warship, the Soviet-era INS Vikramaditya, Modi said the country should also look toward exporting weapons.
"The small countries should feel secure that they have India-produced defense equipment," Modi said.
According to Reuters, foreign fighter jet makers see a multi-billion dollar opportunity in India's recent decision to scale back purchases of high-end aircraft from France, which may free up rupees to buy a new fleet of mid-range planes.
Modi announced last week that India would buy only 36 French Rafale jets for an estimated $4.3 billion, in effect ending talks on a larger deal for 126 planes that would have sucked up some $20 billion and locked rivals out of the market for a generation.
The U.S. is already partnering with India to produce arms with Indian companies. U.S.-based Lockheed Martin, the world's largest weapons manufacturer, formed a joint venture with India's Tata Advanced Systems to produce parts for the C-130J Super Hercules plane.
Similarly, Sweden's Saab is set to re-pitch their Gripen planes, eliminated in the Rafale tender, as the kind of lighter, single-engine aircraft that Defense Minister Manohar Parrikar said on Monday the air force needed to rebuild its fleet.
'We are here and we are ready,' said a source close to Saab, which is proposing to establish 'fully-fledged production' of the Gripen in India alongside a local partner.
Abhay Paranjape, director of international business development at Lockheed, told VOA that India's defense market is significant and growing.
Rahul Madhavan, director for the aerospace and defense portfolio with the U.S.-India Business Council, also pointed to the Defense Trade and Technology Initiative. That program calls for U.S. and Indian defense firms to co-produce weapons rather than continuing the buyer-seller relationship. Madhavan said that's a sign of the potential the U.S. sees in the Indian market.
"You can look at India as an export market for the world… 'Make with India,'" not just "Make in India," he said.
China's growing arms exports
This push to develop India's defense industry comes as China's defense exports grow.
While the U.S. remains the largest weapons exporter, China was the third largest between 2010 and 2014 according to the SIPRI report.
Between 2005 to 2009 and 2010 to 2014, Chinese exports of major arms increased by almost 150 percent, the report said. While a majority of those exports were to Pakistan, Bangladesh and Myanmar, China exported to 18 African countries as well, according to SIPRI.
And weapons exports are more than just trade deals.
'[China's] growth in exports has supported and kind of enhanced China's efforts to expand its strategic influence across the world," said Jon Grevatt, Asia-Pacific defense industry analyst at IHS Jane's.
Grevatt said many of China's customers were "economically challenged" countries and reliant on China until they repaid the Asian giant for the weapons.
China's exports have grown rapidly in part because military interests intersected with economic interests, said Siemon Wezeman, senior researcher at SIPRI.
A more assertive, influential China is a concern for India and the U.S., said Lisa Curtis, a senior research fellow at the conservative Heritage Foundation in Washington.
"The U.S. sees the Indian defense budget and spending and modernization drive, frankly, as geared towards the China threat," Curtis said. "And of course the U.S. is also concerned about China's military rise."
Challenges for India's defense industry
The question some are asking is whether India's defense industry can develop to a level where its exports can counter those of China and the political weight that comes with it.
Some foreign policy experts believe that, despite U.S. interest in helping the Indian defense industry grow, a weak Indian defense industry makes this unlikely.
"It remains a little bit of an enigma why India is so bad at developing an arms industry," Wezeman said, adding that India had been trying to develop its defense industry since the 1950's, well before China.
One reason is the restrictive policies. A law limits the level of foreign ownership in a defense joint venture to 49 percent, meaning that a U.S. defense firm would not have a majority share in the company.
"Companies are going to want to retain control of the intellectual property,' the U.S.-India Business Council's Madhavan said. 'Billions of dollars of taxpayer money is invested into research and engineering."
As a result, industry experts doubt India will be a major player in global weapons exports anytime soon.
"India's industrial base is not really competitive in the global market. ... India will struggle for many years in terms of exports,' said Grevatt, from IHS Jane's.
Some material for this report comes from Reuters.
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