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Shifting Focus and Spread

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1990s was the turning point for Indian defence sector as the focus shifted from import to building its own defence industrial base and the need was felt to diversify defence purchases, identifying the best globally available equipment for specific tasks. Accordingly, the traditional dependence spread to countries for high technology weapons.

After three decades of reliance on Soviet-produced hardware, in 1991, India's nearly seventy percent of Army armaments, eighty percent of Air Force armaments, and eight-five percent of Navy armaments were of Soviet origin. Early 90's India shifted its focus to build its own defence industrial base by either developing technology on its own or buy them outright from foreign OEMs. Though, this focus became more visible when Indian private industries were allowed to participate in defence production. Indian defense procurement policy was kept abreast to meet contemporary challenges with a sharply-increased focus on self-reliance. DPPs over the decade were revised to make defence manufacturing attractive for Indian industries. The recent reforms processes in India's defence research, development, planning, procurements, defence finance and foreign direct investments and off-setting is a clear indicator of what Indian defence policy makers want i.e. modernization and capacity building in its defence industry.

The shifting focus in Indian defence purchases has been driven by the need to diversify defence purchases and identifying the best globally available equipment for specific tasks. India has been the leading global arms importer in recent years, with its arms purchases totaling approx $12.7 billion from 2010-2014. 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 Above.

Recent Developments

Indo- Russia

Russia has of late faced cut-throat competition from the West and even from Israel in eating into the competitive Indian defense market.  Russian investment in India is merely $1 billion. Barring a few firms like “Systema”, “Rusal”, “Severstal”, “Kamas” and others, Russia has done little to explore India's non-defence sector. Two-way interactions between India and Russia have dwindled. The annual trade turnover targeted to achieve $20 billion by 2015 still hovers around $10 billion.

Russia may not have liked the ongoing contract of French Rafale fighters and American Chinook and Apache helicopters over its aircraft, as also for going slow on the proposed joint projects for producing its fifth-generation fighter aircraft (FGFA) and multi-role transport aircraft. While, India is concerned about delivery schedules and increase in cost mid-way through execution of contracts. Lifting arms embargo against Pakistan and signing Mi-35 attack helicopter contract are also touchy points. Notwithstanding above, Russia remains a privileged partner as they have stood together in good and bad times. To build trust, the Indian defence minister visited Moscow during 1st week of  Nov 15 to set stage for Modi-Putin Summit in Dec 15. The Indian Defence Minister had discussed the following major acquisitions:

  • S-400 Triumf air defence missile systems
  • Russian Kamov Ka-226T light utility helicopters
  • Nuclear-powered submarine
  • Serviceability of Sukhoi-30MKI fighter jets FGFA and the MRTA
  • Mi-17V-5 helicopters

On 18 Dec 15, the DAC cleared the purchase of five units of S-400 Triumf mobile surface to air missile defence system (M-SAM), which is expected to cost around Rs 30,000 crore from Russia. This purchase is likely to be pursued on a fast track after Prime Minister's visit to Moscow. The “Triumf”, presently is in service only with the Russian military, can detect an incoming ballistic missile (usually carrying a nuclear payload) at a range of 600 km and shoot it down when it is still 230 km away, and 185 km above the earth would provide a credible anti-ballistic missile (ABM) shield. Fighter aircraft can be shot down when they are still 400 km away.

During Indian Prime Minister's visit to Russia in Dec 15, India had an agreement with Russia to build 200 Kamov 226 Light Utility helicopters - the first big project for a major defence platform under the government's 'Make in India' initiative.

Reliance Defence has entered into a strategic partnership agreement with Russia's largest shipbuilder, United Shipbuilding Corporation (USC) and Rosoboronexport, which focuses on modernisation and refitment of all Russian origin surface warships of the Indian Navy at Reliance's newly acquired facility in Pipavav.

Major ongoing projects and projects under pipeline from Russia is as per the table.

ProjectCost
ONGOING PROJECTS
Sukhoi-30MKI  $12 billion
MiG-29K  $2 billion
T-90’s Main Battle Tank (657 Nos)  $1.5 billion 
BrahMos Supersonic Cruise Missile  $ 4.8 bilion
ORDERS IN PIPELINE
Lease of 2nd Super Power Submarine  $1.5 billion
Lease of Akula-II class Submarine INS chakra  $900 million
10 Long Range s-400 Triumf anti-aircraft/anti-missile systems being fast tracked.  --- 
Joint Production of Kamov Ka-226T Light Utility Helicopter  $1 billion
Additional 48 Mi-17-V5 Heavy-lift helicopter  $1.1 billion
Russian 5th Generation Sukhoi T-50 (PAK-FA) (60-65 nos.)  $25 billion
Upgrade 26 Ilyushin Aircraft  $750 million

Indo-US

Over the past decade, the India-U.S. defence relationship has been witnessing a rapid transformation growing to become a key component of the overall bilateral partnership. Bilateral trade between US & India stood at $61.64 billion in 2013-14. India has received $13.28 billion in FDI from the US between April 2000 and November 2014.

The India-US defence ties and cooperation has mainly focused on defence purchases through FMS route including big ticket items such as the C-130J, C-17 transport aircrafts etc. In less than a decade, and starting at zero, the FMS program has grown to a combined total case value of approximately $6 Billion by 2013 making India the second largest Foreign Military Sales (FMS) customer of US. The deals under FMS also likely to include purchases of 145 howitzers from BAE Systems, 275 F-125 aircraft engines for Jaguars, 50 F-404 aircraft engines, four additional P-8I aircraft and six more C-17 globemaster-III transport aircraft.

United States and India both are looking towards moving away from a buyer-seller relationship towards transfer of technology and joint development, joint production and joint marketing of latest weapons and technology. Consequently, in January 2015, both the countries took a big step by renewing their bilateral defence pact for 10 more years - the '2015 Framework for the U.S.-India Defence Relationship' to strengthen cooperation between the two countries in the areas of defence technology, military exchanges, and counter-terrorism. The agreement incorporates for the first time a provision to co-produce weapons in India, along with transfer of technology through the Defence Trade and Technology Initiative (DTTI). The agreement makes India part of a group of nations that includes Japan, U.K., and Taiwan, with whom the U.S. cooperates on defence technology. Further, it seeks collaborations in 13 specific areas, including: participation in multinational operations; expanding two-way defence trade; expanding collaboration on missile defence; conducting exchanges on defence strategy; and increasing intelligence cooperation etc. The US has agreed to facilitate India's admission into all four global technology control regimes

  • Nuclear Suppliers Group (NSG),
  • Missile Technology Control Regime (MTCR),
  • Wassenaar Arrangement
  • Australia Group.

Specifically, four pathfinder projects for co-production and co-development were identified through the DTTI, which serves as the guiding principles for the framework for cooperation.  All the projects are experiments in making simpler technologies and easy-to-produce equipment. If successfully executed, it will help India build advanced weapons systems in the future and co-develop other weapons technologies with the U.S.

Pathfinder Projects Identified by India and  US

Defence ProgrammeDetails of the SystemProduct Owner
RQ-11B Raven Unmanned Aerial System. Widely used hand-launched drone for surveillance and reconnaissance. Aero Vironment (India has shown no interest in this project)
“Roll on/roll off” kits for the C-130J aircraft. Transforms the cargo aircraft into a long-range surveillance aircraft. Lockheed Martin
Mobile Electric Hybrid Power Sources. Supplements power from the traditional generators on the battlefield. US Government
Uniform Integrated Protection Ensemble Increment I1. Protective body suite against chemical and biological warfare agents. US Government

It has also been reported that Indian side has requested proposals under DTTI for the under mentioned defence technologies.

  • "Hot-engine technology" for indigenous light combat aircraft Mark II to be powered by GE-414 jet engine. This technology allows fighter to operate in hot weather conditions like in deserts without any possibility of an engine failure.
  • Raytheon-manufactured "Signature Aperture Radar" that can penetrate thick forests.
  • Stealth-coating technology. The coating deadens radar images and would give Indian jets minimum radar profile and maximum survivability in hostile conditions.
  • Long-endurance high-altitude UAV, the Global Hawk, being manufactured by Northrop Grumman. Equipped with synthetic aperture radar, the drone can fly at an altitude of 65,000 feet, stay air-bound for more than 14 hours and survey upto 40,000 sq km terrain in a day.
  • Textron-manufactured Scorpion mutation bomb, used for protecting military installations.

The US response is still awaited; however the perception is that the US may not like to share hi-tech technology with India and that DTTI will be a channel to help American companies to bypass competitive procurement and multi-vendor tenders.

Indian Defence Minister accompanied by a delegation of Indian industry  the first-ever confluence in public, big players (Tata, L&T, Reliance) and rising players (Dynamatic Technologies, Sun Group)recently visited USA during 2nd week of Dec 15 in order to deepen military ties between the two strategic partners. The main focus was to accelerate the Indo-US defence engagement by all means necessary and to synchronise joint defence production with US partners. Lockheed martin and Boeing have offered production lines for the F-16s and F-18s to India. Boeing is also ready to set up assembly lines for either the Apache or the Chinook helicopters. During the visit, Secretary of Defense, Ashton Carter has informed that the US Department of Defense has updated its policy on gas turbine engine technology transfer to India and US will now be able to expand cooperation in production and design of F-404 jet engine components.

Indo-Israel

The defence ties between the two countries predate diplomatic relations by decades. Israel since 1998 and after the Kargil war became a staunch ally. The Israelis' defence trade with India has been one of the main reasons for Israel's emergence as one of the top five exporters of defence equipment in the world. In the past decade alone, Israeli defence sales to India surpassed $10 billion and the exports are expected to grow faster in the coming years.

India cannot afford to ignore the sensitive high technology offered by Israel. Israel even went to the extent of supplying the Elta Greenpine and Phalcon radars which was denied to China on US insistence early last decade. The special defence relationship developed between the two countries has upstaged even the Russian defence industry causing Israel to emerge as one of biggest supplier of arms to India. This relationship is worth more than USD $1 billion annually, not counting the many joint development programs initiated in the last few years. Both the countries have also sealed some G2G deals in the past. However, these have been few in number as compared to US and Russia.

Indo-France

India-France Defense Cooperation dates back to the early years of India's independence but this relation was restricted to the relation of a buyer and seller. In 1998, the strategic partnership took India-France Defence Cooperation further. Several major deals have been struck between France and India since 1998. In 2006 Government of India and Government of France have signed an Agreement on Defence Co-operation and Technical Agreement between them which also includes co-production of weapon systems and ToT. Joint production and collaboration projects have increasingly being taken up between French and Indian defence companies:

However one of the major deals that actually bolstered the defence relations between the two countries was the signing of the $4 billion worth six highly advanced diesel electric Scorpène submarines deal in October 2005 between India and Armaris, a subsidiary of France's Thales group, and Direction des Constructions Navales (DCN). This contract is a technology transfer agreement: six submarines will be assembled by India's public sector shipyard, Mazagon Dockyards Limited (MDL). Recently in May 2015 Indian Government has signed a deal with France for direct purchase of 36 Rafale multi role fighter aircrafts worth $4.5 billion. India is co-developing the Maitri missile programme worth $6 Billion with MBDA's of France.

Indo-Japan

During the recent visit of Japanese PM Abe, besides other broader agreements India and Japan agreed to enhance defence and security cooperation on equipment & technology and joint research & production. India is scheduled to buy in a deal worth $1.1 billion- a first in 50-years, two US-2 amphibious planes from ShinMaywa besides joint production of ten more planes in India with a private Indian partner. The joint defence production is high priority to strengthen defence production base and will promote 'Make in India'.

Conclusion

The Indian focus has shifted basically to build its own defence industrial base & to make India a manufacturing hub for defence platforms, and for that the traditional dependence need to Spread to countries for high technology weapons.  Russia is still politically, diplomatically and militarily important for India as they continue to be the single largest defense vendor for the Indian industry and are responsible for over 60 percent of Indian weaponry currently in use by India. The USA & other European countries have the latest technology and are also keen to share them with us and hence a transition is natural, but concern remains. However, if India has to modernize, choices are few and one has to trust but verify.

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