Almost 34 years after the Bofors scandal hit India and Sweden, the
Scandinavian country is looking to revive the past ties as the country’s
defense industry looks to tap into the world’s largest military
spender-India. Leading this initiative is Saab -- Sweden’s largest
weapons manufacturer that is offering Make in India, tech transfer and
partnership with local companies.
“Saab is looking at the Indian
Industry as our potential partner in product development for the world
market. Our plans in India are based not just on selling products but on
creating a defense eco-system, which would involve hundreds of Tier-1, 2
and 3 partners, vendors and suppliers”, said Jan Widerstrom, Chairman
SAAB India in an email to ET.
"Saab would incubate partnerships
between its global supply chain and Indian suppliers, besides fostering
R&D partnerships for next-generation platform, system and sub-system
design and development across the industry,"Widerstrom said.
In
April this year, when Indian Prime Minister Narendra Modi visited
Stockholm, it was a first visit by an Indian head of state in 30 years.
The Bofors scandal in 1984 hit the then Indian Prime Minister Rajiv
Gandhi and his Congress party for allegedly receiving kickbacks over the
sale of 410 field howitzer guns. This scandal had created a dent in the
diplomatic relations between both the countries. However, the two-day
trip by PM Modi was seen as an indication that both the countries have
perhaps put the ghosts of the Bofors behind and looking at new
beginnings in trade, specifically in areas of defense.
With the
emergence of a new global world order, the alliances post the cold war
have also seen a shift. For India that traditionally relied on Russia
for its defense procurement, the cozying up of the former soviet country
to China has meant that India scouts for new partner in the West. For
Swedish defense industries, which is chained by the export policies that
limits the countries where it can trade with, India, being the largest
democracy in the world, becomes a convenient partner.
Saab is
wooing India by offering to share technology to manufacture its latest
range of its jets, the JAS 39 Gripen in partnership with India’s Adani
Group.
SAAB plans to bid for the Indian Air Force’s recent
Request For Information (RFI) for jet fighters. The IAF is looking to
buy 110 fighter jets that will be made in India.
“A
collaboration between Saab and Adani will combine the technical and
product excellence of Saab and mega project execution capabilities of
Adani with the intention to manufacture defence systems locally in
India”, said Saab's Widerstrom . When asked about the investments, Saab
said that the size of investments would depend on the nature of the
fighter aircraft procurement order and the requirements of the
government.
In search of new partners ::Sweden,
through Saab, has been looking to sell its jets in emerging markets like
Brazil and South Africa where it offered attractive trade benefits and
price. In Brazil, Saab has promised a fixed price, irrespective of any
eventuality during the course of production. In South Africa, it has
promised to buy as much or more than the price of the jets from the
country, analysts say.
Siemon Wezeman, Senior Researcher from
Stockholm International Peace Research Institute (SIPRI), said this
renewed eagerness towards trade relations with India is also due to its
own domestic compulsions. “Sweden’s arms industry can no longer rely on
the domestic market because it has decreased its defense budget since
cold war, and hence exports has become a way to keep its defense
industry alive”, Wezeman told ET. The combined size of Swedish defense
companies is estimated to be around $10 billion, though much smaller
than the US or other European counterparts, yet these companies are one
of the largest providers of employment and revenue for the country with a
10 million population.
As development of large and
sophisticated weapons becomes expensive, finding partners for future
projects and future development is very important for Sweden, according
to Wezeman. He adds that for such future projects Sweden has to have
clear indications on where they can sell and needs preferably to know
about the partners before they start developing or co develop the
equipment, this is why India has emerged as important ally for Sweden.
In
2015 Sweden’s Inspectorate of Strategic products the government body
that controls defense exports approved eight applications from Swedish
companies to enter into agreements involving the granting or transfer of
manufacturing rights outside Sweden. India, Brazil and United States
were only three countries who received the transfer.
“Given the
size of Indian defense market and being a democracy, India is a very
important country to trade with for countries from Europe”, said
Rajeswari Pillai, Senior Fellow at the Observer Research Foundation, a
think tank.
Between 2013-2017 SIPRI data shows that India was
the world’s largest importer of major arms this accounted for 12 per
cent of the global deal. Of these total imports, Russia accounted for 62
per cent of the country's arms imports. However, arms imports from the
USA to India rose by 557 per cent between 2008–12 and 2013–17, making it
India’s second largest arms supplier.
Pillai who specializes in
Nuclear and Military studies said India’s attractiveness for global
defense companies is also because the country has been diversifying on
who it partners with for its defense procurement. Though Indian has
traditionally relied on Russia for its military purchases, that
relationship has gone through a significant change post 90s. According
to Pillai this is because sensitivity from the Russian side towards
India is waning. “India deployed MKI 230 jet from Russia in its borders
surrounding China, but at the same time Russians have given out MKI 235 a
better version of the jet to Chinese. So India has realized that it
needs other countries whom it should rely on,” Pillai adds.
The
other defense partners who are softening to India are companies like
Lockheed Martin, the world's largest defense corporation that in 2017
announced a JV with India's Tata to make their F16 jets in India
specifically for the government need. This JV materialized despite the
reluctance of American arms manufacturer to share their technology
outside the country.
Robin Sukia who heads the Sweden India
Business Council in Stockholm thinks that Swedish defense companies are
not sharing their technology just because they are desperate to sell
their aircrafts, but it is a strategy to co-develop products for future
markets. “So something like this Saab started even before he government
started talking about it. To co-develop in India, the technology
transfer, understanding local engineering which can be used in other
market”. Saab this year celebrated 40 years of partnership with India’s
Armed Forces and Industry, through a technology partnership with the
Ordnance Factory Board on the Carl Gustaf System- the company’s notable
shoulder-launch weapon’s system.
Great incentives, but will the deal ever take off?The
desperation of companies like Saab to look for new markets, and
Sweden’s own foreign policy of doing business with democracy such as
India perhaps has a bigger roadblock than its past affairs like the
Bofors scandal, experts feel.
The biggest deterrent in doing
business in Indian defense experts say is the extremely slow
decision-making process by the government officials that often drags for
10-15 years. Sukia of SIBC says that besides the large defense players,
there many SMEs in Swedish defense space who are interested in India,
but it is extremely expensive for them to enter because of the long-time
frame.
“The main feedback from Sweden is that it takes too long
to sell in India and that means if you look at from my perspective, if
you look at other markets these companies who have great technologies
they have to make a call on should I look at India in a 10-15 year
period or shall I look at other market which has a 3-5 year period”,
Sukhia said.
Airtarget AG, a Swedish SME that specializes in the
Scoring technology that helps in precision shooting during combat said
that it has learnt over the years that it takes patience to do business
in India. “I am trying to convince my Board to set aside a separate
budget only for India”, said Babak Hashemi who heads the sales for India
and Middle East region.
Pillai from ORF however has a much more
alarming view. She says irrespective of the country that we are dealing
with, India’s Ministry of Defense (MOD) over the years has been
extremely slow in procuring equipment’s. Once must look at the Rafale
purchase to understand the tedious process, the agreement was officially
announced in 2000 by the then Vajpayee government which was later
signed in 2012 by the Congress government and the final agreement to
acquire them came only in 2014 when Prime Minister Modi visited France.
“The
red tape in defense procurement is high and folks in MOD have no clue
on the urgency. This is a serious issue as it leaves India in a
vulnerable position compared to countries like China or Pakistan,"
Pillai concludes.
economictimes
