Producer, partner, importer, exporter: India as key player in global defence equipment market

Ajay Banerjee

STRADDLING the international defence equipment market, India has projected itself as a producer of ‘rightly-priced’ weapons for smaller countries even while being a ‘partner’ with developed countries for niche technologies. It has positioned itself as an exporter with $1.5 billion trade this fiscal, while the import of weapons is still a harsh reality, though it’s slowing down.

The 14th edition of Aero India at Bengaluru witnessed participation by more than 80 countries, along with 700 exhibitors from India and abroad, including domestic industry, start-ups and global companies.

Besides the usual business-to-business (B2B) deals that totalled nearly Rs 80,000 crore, the events had multiple messages.

One, India was determined to do the ‘steep climb’ of technology. Two, India’s widening industrial base allows it to speak from a position of ‘strength’. Three, well-attended meetings with visiting defence ministers and air forces’ officers conveyed a widening of ‘area of strategic interest and influence’. Fourth, foreign suppliers know that a ‘make in India’ component is a must to do business in India.

“How many countries have produced a sea-going aircraft carrier, fighter jets and a nuclear submarine — all being benchmarks of engineering?” asked a serving officer to explain the interest in the Indian military equipment market.

Parallel streams’ approach

Being a producer of weapons, yet looking for international partners for technologies, sounds dichotomous. But it is not so. These are parallel streams addressing separate economies and needs.

Prime Minister Narendra Modi, speaking at Aero India, made a fine distinction: “India is emerging as an important partner for those countries looking for a reliable partner. Our technology is cost-effective.”

He was clearly referring to the 75 countries to which India has exported $1.5 billion (approximately Rs 13,000 crore) worth of equipment in the ongoing fiscal. Exports include radars, artillery guns, BrahMos missile, off-shore patrol vessels, helicopters, besides small parts, among others.

Riding on these successes, India is pitching the Light Combat Aircraft (Tejas) with Argentina and Egypt, besides the BrahMos missile, artillery guns and warships with other ‘friendly countries’.

The growth of public and private industry has allowed New Delhi to get a toe-hold in the global market. “We are ready for a partnership with those countries which are far ahead in the defence sector,” Modi added.

India is looking for joint production in engines, transport planes and cutting-edge technologies. General Electric, which supplies engines for the Tejas jets and for the carrier INS Vikrant, is set to open a plant in India to produce the GE 414, 98 kilonewton thrust engine. It will power the LCA Mark 2, the advanced medium combat aircraft, and the Navy’s deck-based fighter jet — collectively, some 350 are slated to be produced.

Among the existing partnerships are L&T’s contract to service US Navy warships. Cabins of the Boeing’s Apache helicopters are made in India at a TATA-Boeing facility, while components of the TATA-Lockheed Martin facility at Hyderabad are part of the global supply chain.

Airbus is setting up a facility to make some 70 of the C-295 transport planes in India. Dassault of France has set up one at Nagpur to make parts of its business jets. Hindustan Aeronautics Limited (HAL) and Hensoldt — a German company — are collaborating. HAL will get full design and transfer of technology allowing helicopter pilots to get a real-time picture in the mountains, preventing accidents.

Buyer and seller

Every year in March, the Sweden-based think tank Stockholm International Peace Research Institute (SIPRI) releases its annual report on global arms purchases. Last March, SIPRI in its assessment for the five-year period (2017-2021) said India was the world’s largest importer of weapons and military equipment, accounting for 11 per cent of all such international imports.

It had a bit of good news. Comparing two five-year blocks — between 2012-16 and 2017-21 — the report said Indian arms imports decreased by 21 per cent.

Imports have been declining for the first time in many years. The financial year 2021-22 — ending March 31, 2022 — saw imports of weapons worth Rs 40,839 crore, Parliament was informed in the first leg of this budget session. Imports now form about 36 per cent of the total acquisition; it was around 48 per cent in 2017-28.

Exports are rising. In the last fiscal (2021-22), India exported military equipment and technology worth Rs 13,000 crore and has a target of Rs 18,000 crore for this fiscal. The government has a target of touching $5 billion in exports annually by 2025. Private sector companies dominate the exports market with a share of almost 90 per cent.

The SIPRI report also listed India at the 23rd spot among the top 25 exporters of weapons, with Myanmar, Sri Lanka and Armenia being its top customers.

‘Make in India’ confidence

The policy goals are clear. Defence Minister Rajnath Singh spelt them out when meeting CEOs of 70 local and global companies. “India does not want to remain just an assembly workshop.” The targets are to design, develop and manufacture cutting-edge critical technologies within the country.

The Indian Army is looking at 110 issues and has asked Indian start-ups to provide solutions for design, development and manufacturing ecosystem for armament, surveillance, artificial intelligence, Metaverse, robotics, quantum technology, cyber, smart ammunition, among others.

The IAF, expecting short supplies of spares from Russia, on February 10 asked the Indian industry to provide solutions for servicing engines of the Russian origin MiG-29 jet fleet and servicing of the AN-32 transport plane. Going a step ahead, the IAF wants solutions for tools and ground equipment for the French-origin Mirage 2000 jet and the latest Rafale. The list goes on.

Some 75 per cent of the defence capital procurement budget has been earmarked for the domestic industry in the forthcoming financial year, 2023-24. This is up from 68 per cent in the present fiscal.

Private companies Mahindra and Godrej have multiple tie-ups. At Aero India, HAL and French Safran, which have a joint venture for making engines for helicopters up to 5 tonnes, announced to make an engine for the 13-tonne class indigenous helicopter.

HAL also signed a contract with the Argentinian Air Force for the supply of spares and engine repair of helicopters.

Airbus and the Indian Institute of Science (IISc), Bengaluru, signed an MoU to expand access to aerospace education and research. Kalyani Strategic Systems Limited (KSSL), a subsidiary of Bharat Forge, signed an MoU with Rolls-Royce Marine for the development of naval engines for the Indian market.

Ukraine sends minister

Defence Ministers of 27 countries, including the Ukrainian Defence Minister, were present at a meeting where India offered cooperation for all to grow together and have joint ventures, co-development, co-production and provisioning of defence equipment, besides training and maritime security.

The focus was clearly Africa and South America, with a majority of participants being from these two continents. India made it clear that nations that are richer or militarily and technologically more advanced cannot dictate solutions, clearly hinting at China’s ingress in smaller countries.

India also balanced the equation between the US and Russia. While the US flew in the latest F35 fifth generation fighter jets, the Russians reminded that they were the first to ‘make in India’ and did it decades ago with the Sukhoi 30MKI jet being 60 per cent localised.

Private participation

• Space as dual-use domain is the fourth dimension in war with its abilities of disruption. The MoD has invited the private sector to join in on 75 different projects.
• One of the projects entails having 24x7 visibility through satellite imagery of the borders and areas of interests.
• A concept paper on space technology parks was released on how to handhold the private sector.
• Some 200 small companies are working with the Indian Space Research Organisation.
• India has a 2 per cent share in the global space system market.

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