High-tech weapons made in India

If the country’s military is 70 percent import-dependent for critical armament supplies, it must follow a realistic approach for hi-tech foreign defence hardware suppliers to make in India. The dream of India - the world’s largest defence importer - to emerge as a major arms producer may take much longer to turn true under its current defence FDI policy no matter what assurances it may receive from global defence technology giants and suppliers. Normally, foreign high-end weapons manufacturers would like at least a controlling stake in co-production ventures in India. Until now, India, has done little to establish itself as a major manufacturer-exporter of military arsenal. In the $400-billion-plus global legal defence export trade in 2014-15, India’s share was just around $100 million, supplying mostly low technology items and parts to some 22 countries. In contrast, China’s weapons export in 2014-15 was worth $20 billion. Along with established players Germany and France, China became the world’s third largest war equipment exporter – all having an equal market share of five percent each. For inexplicable reasons, India had mostly preferred import to local production of sophisticated weapons. The Indian military has remained high on its combatants’ strength and low on lethal power.

Though Russia has been traditionally more cooperative with India, encouraging its domestic defence production, it is time, the country works hard and adopts a more pragmatic foreign direct investment policy in defence output if it wants major overseas suppliers such as Russia, US, and EU set up manufacturing outlets in the country. Expectations are running high on large US participation in India’s armament industry, following Manohar Parrikar’s four-day visit to the United States with a small team of local manufacturers nearly two months ago -- the first by an Indian Defence Minister since 2008. The question is: will this visit carry some genuine substance rather than traditional symbolism? Defence suppliers are concerned if and when the announced deals and their approvals will result into firm contracts. In 1985, Prime Minister Rajiv Gandhi had bluntly told the then US Defence Secretary Casper Weinberger and chairman of joint chiefs of staff General John W Vessey that India was hesitant to buy arms from the US as they came with too many strings attached. The late Prime Minister had reportedly mentioned as to how the US was used to cut off sales and supply of spares arbitrarily under its laws and refused to co-operate in co-production ventures. Times have changed with geopolitics in the region, following growing terrorist attacks and religious extremism and the role of Pakistan, West Asia, West and North Africa, among others, in this regard. Parrikar may have discovered a very different US defence establishment which is prepared to sincerely cooperate with India to arm the country and participate in its latest defence production ambition.

The US tilt towards India for a more extensive defence transaction began under the UPA regime which was successfully engaged by America in the historic civil nuclear cooperation agreement. The US started pushing more defence deals, offering technology transfer, following up on pending contracts, and agreeing on co-production ventures. Despite that the defence co-operation between the two countries failed to reach the desired levels under the generally suspicious attitude of former Defence Minister A.K. Anthony. Parrikar may have found US Defence Secretary Ashton “Ash” Carter a very India-friendly boss ever in the department. Carter has been consistent in his outlook towards India since he was Deputy Defence Secretary almost five years ago. He has been personally pushing defence ties between the US and India and noted that “India (is) destined to be a security partner of the United States in the long run.” In a Foreign Policy article, Carter underscored the change in the Pentagon mindset on technology transfer to India from a “presumptive no” to “presumptive yes.” The 2012 Defence Trade and Technology Initiative (DTTI) was paradoxically termed as “Carter Initiative”.

India and US are now working on as many as six DTTI projects and Parrikar is believed to have asked for high-end transformative technologies for co-development. Interestingly, last week, Boeing CEO Dennis Muilenburg on his maiden visit to India said his company was “taking a hard look at the opportunity for the F18 fighter jet as an area where we can build industrial capacity, supply chain partnerships, technical depth, design and manufacturing capability in India, providing an operational capability that is useful for Indian defence forces.”

A number of government-to-government and corporate partnership projects are said to be in progress. They include Mobile Electric Hybrid Power Sources (MEHPS) and Next Generation Protective Ensemble. The joint working groups are reportedly working on jet engine technology and aircraft carrier technology cooperation. Defence Minister Parrikar also deserves credit for negotiating technology transfers and defence manufacturing with Russia and South Korea during his visits there. Few will disagree that such engagements hold significant potential for India. Beyond DTTI, the US approved BAE Systems’ proposal to move the assembly line of M-777 Howitzers to India. However, several issues, including the equity control in the case of joint venture, need to be resolved before “Make-in-India” in defence really takes off in desirable areas of co-production.

The defence cooperation policy needs clarity. Foreign prospective partners in defence production and suppliers are not unaware of funds constraint at India’s defence department. The most important question before both India and foreign defence suppliers is: will the 2016-17 national budget treat the Defence Ministry’s “Make-in-India’ dream and procurement concerns differently. Both the US and Russia, which together account for 58 percent of the global defence trade, and also other defence majors are ready to work with the Narendra Modi government thanks to the changed perception of defence cooperation under the present administration. Russia was known to have offered without strings high-end defence and space technologies to India. But the US companies are always reluctant to pass on the latest technology, even when they officially agree. Their offer is tied up always with strings. It is to be seen how Parrikar and the government are able to convert the current positive perception into action on the ground.