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Looking East for Partnership and Growth

The sourcing of military arms/technology by India has always been mostly from Western Countries and in the bargain the technology available in our neighbouring region is neglected. In the changing ecosystem the author feels we should look at the technology developed by the neighboring countries…

India has been the leading global arms importer in recent years, with its arms purchases totaling $12.7 billion from 2010-2013. India's defence imports come from Russia, US, France, Israel and Others. The major portion of import procurements were for aerospace platforms, missiles, armoured vehicles and other defence equipments as shown in Fig below.

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At present, the defence services need practically all types of weapons and systems, fighter aircraft, armoured vehicles, radars, missiles, naval vessels, etc. India would be developing and may look for the following equipment & technologies:

•    Aviation. Variety of combat aircrafts, helicopters, UAVs, aerostats, technologically advanced avionics
•    Space. Space technology to exploit applications of real time meteorology, navigation, communication, surveillance, weapon guidance, cartography, synchronization
•    Electronics. AWACS, GPS, communication & surveillance technologies which include Sensors,  NVDs, Sensors, Radars
•    Electronic Warfare. Electronic warfare, direction finding and deception technologies
•    Command & Control. Armaments, missiles, guns, mortars, sensor fuzed weapons
•    Combat Vehicles. FMBT, FICV,LCVs
•    Submarines. Nuclear powered submarines, UUVs
•    Miscellaneous Items. Engines, digital technology, platform with stealth technology, carbons composite and fibre, cryptography and crypto analysis, artificial intelligence and robotics etc

The country is in the midst of a defence modernization drive, replacing and acquiring weapons / platforms. An immediate concern for India's armaments strategy is to strike a balance in the holding and the problem of replacement of obsolescent major weapon systems. Further, notwithstanding the potential, there exists a large capability gap in the technology and equipment which India needs today and what can be produced at home. This gap is unlikely to be bridged in the immediate future (5-10 years). Keeping in mind that the domestic industrial base (DIB) both in terms of global standards of technology and performance has been unable to meet the military need in the past, consequently, India today remains heavily dependent on imports and the situation is likely to change.
The expected defence capital budget including the Homeland Security of India is set to rise to $ 150-200 billion by 2027. Taking into account that expenditure on Buy (Global) is expected to be about 20 percent of the capital budget while the Buy & Make will have roughly 60- 80 percent contents for Make-in-India, the country offers plenty of opportunity for Indian and global OEMs.

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Conventionally, India has contemplated more on Southeast Asian countries as the keystone of its expedition to spread political influence and profit from the area's economic vigor. However, with regard to procuring military arms for the enhancement of the defence capabilities of its Armed Forces, its preference has always been the Western Countries and thus neglecting the technology available in its neighbouring region. It is high time that the country readdresses the policies of the past and gradually emphasizes on the capabilities of these countries while procuring defence technologies especially in the back drop of the fact that these countries have the capabilities and have been successful in developing world class state-of-the-art defence equipments and technologies and giving a strong competition to the Western countries. Also, given the fact that at present India's focus not merely lies in modernizing its three defence services with high tech and sophisticated defence weaponries/technologies but also on lowering down its spending and dependence on imports by way of developing a strong indigenous defence industrial base. India thus is looking forward to transcend the dependence of a buyer-seller equation and move towards joint development of weaponry. Procurements from South East Asian countries would definitely be a huge and useful step towards this as these countries are ready to provide the requisite technology transfer with potential defence deals and also ready for joint development in defence which has been missing in the deals concluded with US and European countries lately.

As India strives to develop its own broader industrial capabilities, the partnerships with friendly Southeast Asian international defence players could provide an avenue for capability and knowledge transfers. This would also enable countries to grow not only their defence industry base but also benefit adjacent industries, supply chains and local distribution networks. Let us take into consideration the defence industries of three major South East countries namely Japan, South Korea & Singapore which have elevated considerably in building a strong defence industrial base and coming out with world class sophisticated technologies in past few years.

JAPAN'S DEFENCE INDUSTRIAL BASE
India & Japan have always shared close military ties. They have shared interests in maintaining the security of sea-lanes in the Asia-Pacific and Indian Ocean and have co-operation for fighting international crime, terrorism, piracy and proliferation of weapons of mass destruction. The two nations have frequently held joint military exercises and have co-operated on technology. On 22 October 2008, both the countries concluded a security pact.

Japan's self-imposed ban on arms exports had till date kept the country's defence contractors out of foreign markets. However, the recent decision to set up a regulatory system to export equipment for military use is expected to boost its future role in global consortiums. Japan has plethora of specific, component level and dual-use technology that it can bring to future partnerships. The only major defence item exported by the country in the recent past has been DC-10-40 transport to the United States. The progress in recent years with regard to building components for the most advanced civilian aircraft such as Boeing 767s/777s/787s and co-producing advanced military aircraft such as the Lockheed P3Cs and F-15s is note worthy. Mitsubishi Heavy Industries Ltd and Kawasaki Heavy Industries Ltd are the two major defence contractors of the country's defence industry and had come up with some stealth defence technologies in the past. Mitsubishi Heavy is in advanced talks to supply parts for the F-35 stealth fighter to Britain's BAE Systems in what would be the first involvement of a Japanese manufacturer in a global weapons programme.

India is all set to become the first country since World War II to buy a military aircraft from Japan. India is likely to negotiate purchase of 15 US-2 amphibious aircraft for the Indian Navy from ShinMaywa Industries at total cost of $1.65 billion with each priced at about $110 million. The plan is to deliver two aircraft and then assemble the rest of the planes with an Indian partner in India, giving India access to Japanese military technology. As of now, Joint Working Group on US-2 amphibian aircraft has met to explore the modalities of cooperation on its use and co-production in India. The deal lays the ground for a broader Japanese thrust into India. Apart from this deal, the Indian Navy is also keenly interested in Japanese patrol vessels and electronic warfare equipments. Both the countries are looking forward in working towards increasing cooperation in the area of advanced technologies. India and Japan are poised to conclude a far-reaching agreement during the visit of Indian Prime Minister during August-end 2014 to upgrade the defence dialogue mechanism involving both Foreign and Defence Ministers, from the current level of Foreign and Defence Secretaries, with the intend of providing stability in the Asian region and to counter balance the rising power of China. The scope of bilateral defence cooperation is likely to be expanded in safeguarding the safety of sea lanes through exchanges between coast guards and increasing joint drills between both the country's naval forces.

SOUTH KOREA'S DEFENCE INDUSTRIAL BASE
South Korea is emerging as one of Asia's arms exporting powerhouses and has been ranked number 10 in defence technology rating recently. South Korea has already overtaken the U.K., Italy, and Israel within the region and by 2016 it is expected to even overtake China.  It began to pay attention to the defence industry in the 1970s with capabilities limited to reverse engineering arms imported from the United States. Since then, the country's defence technology has consistently improved to the stage of producing capital-intensive smart weapons. Some of the major defence companies include Samsung, Korea Aerospace Industries, and LIG Nex1 and these have been named among the Top 100 arms-producing and military services companies in the world last year by the Stockholm International Peace Research Institute (SIPRI). The defence industry growth is with different mindset i.e., beside national security it has the potential to become a growth engine for South Korea, generating a new market economic growth and jobs. This could be the model for developing countries around the world for national development. From the period 2003-2013, the country's defence equipment exports totaled $2.21 billion. The major defence items that has been exported by the country comprises of amphibious assault landing ship, patrol craft, submarine, training ship, corvette, tanker, anti-ship missile, towed and self-propelled gun, trainer/combat, ground attack aircraft and FGA aircraft, training aircraft, MRL, Frigate and IFV.

India should certainly consider sharing technology with South Korea with whom it shares warm defence ties. The defence ties between India and South Korean defence began in 2005, when the two countries signed a Memorandum of Understanding (MoU) on defence logistics and supplies. Further in 2010, both the countries signed two MoUs on defence-related exchanges of experience; information and futuristic joint defence technology development were signed. The same year, the two countries declared a strategic partnership. Considering that the country boasts a technologically advanced and cost-effective military industrial complex and has a wide base of companies like Hyundai, Samsung, Daewoo and Korean Aerospace, and their capabilities in missile development and naval combat system are well acknowledged/internationally accepted in the global defence market, could help India diversify its list of defence suppliers and R&D allies over and above having world class technologies in its arsenal and that too at competitive price. Recently, the Indian Defence Ministry approved the long-pending $1.5 billion procurement of eight mine countermeasure vessels (MCMVs) from Kangnam Corp of South Korea under transfer of technology. Kangnam's Pusan shipyard will be constructing two MCMVs while Indian Goa Shipyard Limited (GSL) will build the remaining six under a technology transfer. Apart from this, a number of naval systems are also on offer for India to acquire. In the last couple of years, South Korea has also emerged as one of the largest FDI contributors to India. Defence sector cooperation leading to co-production of hi-tech weaponry and joint exercises of the two navies is gathering momentum at present between the two countries.

SINGAPORE'S DEFENCE INDUSTRIAL BASE
Singapore has emerged as the fifth-largest arms importer in the world according to the Stockholm International Peace Research Institute (SIPRI). Only India, China, Pakistan and South Korea spent more on weapons than a small country like Singapore over that period. However, Singapore not only does buy military arms, but also sells an array of weapons to other nations. The country has long sold weapons to other developing countries, but has recently been winning its first large orders from Western armies too. From the period between 2003-2013, the country's defence equipment exports totaled $215 million. Light Helicopter, Patrol craft, OPV Helicopter, FGA aircraft, APC, Towed gun, Mortar are the key defence item exported by the country.

Singapore Technologies (ST) Engineering Ltd is the top most defence manufacturer of Singapore and also one of Asia's largest defence and engineering groups, specializing in innovative solutions and services in the Aerospace, Electronics, Land Systems and Marine sectors. It is the only South-East Asian firm in SIPRI's top 100 defence manufacturers. ST Kinetics, the land systems and specialty vehicles arm of ST Engineering Ltd, is one of Asia's leading land systems and specialty vehicles companies for the commercial, defence and homeland security markets. Both the parent company and its subsidiary has manufactured some world class highly sophisticated defence items like armoured vehicles, artillery systems which are currently being used by many countries of the world. ST Engineering has recently sold over 100 Bronco (or Warthog) armoured troop carriers to the British, for use in Afghanistan and is one of the world's top suppliers of 40mm ammunition as well as portable weapons like its CIS 40mm Automatic Grenade Launcher. It has also recently signed a deal to sell laser-guided bombs, vehicles and aerial refueling services, among other things to the U.S.

India and Singapore had initially shared limited defence relations owing to the foreign policy differences in the Cold War era. However, things started changing with India and Singapore signing a bilateral agreement in 2003 on expanding military cooperation, conducting joint military training, developing military technology and achieving maritime security. Since then the defence relations between the two countries has been growing steadily. Both the countries already share robust training program besides joint exercises between the forces. The Singaporean armed forces use Indian military bases for training its military personnel under a pact signed between the two countries. Also, the two military research and development organizations - India's Defence Research and Development Organization (DRDO) and Singapore's Defence Science and Technology Agency (DSTA) - have been involved in defence technology cooperation.

It is to be noted that Singapore armament firm ST Kinetics which produces military weapons such as the ultra light and towed howitzers Pegasus a lightweight 155mm 39-calibre howitzer with self-propelled capabilities and transportable by aircraft was a contender in numerous Indian defence tenders including supply of light howitzers, all-terrain vehicles and assault rifles to be procured for the Indian armed forces; but was eventually blacklisted owing to alleged corruption charges. Recently a request has been received from Singapore for removal of the ten-year ban on ST Kinetics and it is under consideration of the government.

INDIAN DEFENCE EXPORTS:  LOOK EAST
Mounting tensions with China over the disputed waters and its growing influence in Asian region, have spurred a number of small Southeast (SE) Asian countries to boost their defence base with an eye toward better protection of their assets. Rather, major countries of Southeast Asia Indonesia, Japan, South & North Korea, Malaysia, Myanmar, Philippines, Singapore, Thailand, Taiwan and Vietnam are now among the top defence spenders of the world.  According to SIPRI, Southeast Asia collectively made up the second largest military import market worldwide during 2007-2012. Singapore accounted for the largest share followed by Malaysia, Vietnam and Indonesia and other South East Asian countries.
Barring few countries Japan, Singapore, and South Korea the rest of the region continues to rely on foreign technologies, as these countries have not been able to develop an independent and strong local defence industrial base. Foreign firms have a dominant presence in these markets especially US and European suppliers. However, as of now, these countries are looking out a way to reduce most of their dependence on western countries. Most of them lack the capabilities and technologies needed to design and manufacture state-of-the-art hi-tech defence technologies and arms. Countries in the region are also seeking to jointly develop defence capabilities through targeted local defence manufacturing by way of collaborating with other neighbouring countries. Thus, an opportunity definitely exists for India for exporting and also in offering co-production. Philippines, Thailand, Indonesia and particularly, Vietnam and Myanmar have time and again have conveyed India to help them both in terms of military training and weapons supply.  India needs to focus towards these South Asian countries if it wants to enhance its feeble defence exports quantum trend at present. Recently, industry delegation from CII went to Vietnam and found out that there exists plethora of opportunities for India for defence exports. Though there have been exports from India to some of these countries in the last few years but now the focus should be in increasing the number of countries and also the quantum of exports of items like Dhruv Helicopters, Sonars, Radars, INSAS rifles, Lancer attack helicopters and Dornier transport planes while extensively marketing its new technologies like BrahMos missile, Arjun Tanks to these nations. Exporting to these neighbouring countries would not only be beneficial in providing economy of scale and make country's domestic manufacturing globally competitive but would also help in strengthening the bilateral and defence ties amongst the South East Asian Nations.
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Ritika Behal

Ritika Behal

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