For more than a decade, India shopped around the world in
search of a deal for more than $1 billion worth of helicopters to
replace about 200 of its military’s aging light-utility aircraft.
But in August, the new nationalist government surprised many when it abruptly scrapped the request for global bids to buy the helicopters in favor of manufacturing them in India instead.
In
recent months, India has reversed two more proposals for buying
transport aircraft and submarines and decided to make them at home. It’s
part of an ambitious new push by Prime Minister Narendra Modi’s
government to foster a domestic arms industry, within a greater
nationwide initiative Modi has called “Make in India.”
India is the world’s largest buyer of weapons, accounting for 14 percent of global arms imports, almost three times as many as China.
Over
the next seven years, India is likely to spend more than $130 billion
importing arms, officials say, to upgrade its understocked, Soviet-era
arsenal with modern weapon systems.
India’s military modernization can generate
billions of dollars worth of business for American companies, but it
also helps strengthen the nation’s strategic role in the region — at a
time when the Indian and U.S. militaries are conducting more and more
joint exercises. The massive buying spree coincides with India’s growing
border tensions with China and Pakistan, and the approaching drawdown
of international forces from Afghanistan this year.
The United States has surpassed
Moscow as India’s biggest arms supplier. In the past three years, India
spent nearly $14 billion importing weapons, of which more than
$5 billion worth were purchased from the United States. Russia was a
close second, with a little more than $4 billion in arms sales to India.
Analysts
say that closer defense ties between India and the United States are a
key part of what both countries hope will be an improved relationship,
and what President Obama has called “the defining partnership of the 21st century.”
But for American companies, working with India can be frustrating,
and the country ranks low on the World Bank’s global “Ease of Doing
Business” index. The slow pace of decision-making, a 49 percent limit
on foreign investment in Indian defense firms and mandatory obligations
to invest in local defense manufacturing remain irritants for American
businesses.
India’s fiercely independent foreign policy stance
and its reluctance to fully embrace the United States as an ally often
have hindered a full strategic alliance.
Now, Modi wants to upend India’s arms-importer tag and turn the country into not only a defense manufacturer but also a major weapons exporter, much like China has become in the past several years.
“We
dream of making India strong enough to export defense equipment to the
world,” Modi said in August after christening India’s largest home-built
naval warship. “Instead of having to import every little defense
hardware, we want India to become an exporter of these equipment over
the next few years.”
To realize this goal, the government removed the laborious license
requirements on almost 60 percent of the defense products for private
manufacturing companies. Earlier this year, the government raised the
limit on foreign investment in the defense industry from 26 percent to
49 percent to encourage more partnerships with foreign investors.
“We
want that the global defense companies should come to India not merely
to sell to us but also to manufacture here and export to other
countries,” said Amitabh Kant, secretary of the Department of Industrial
Policy and Promotion in New Delhi.
But that still may not be enough to bring critical defense technologies to India, foreign defense companies say.
“Quantitatively,
raising the cap from 26 percent to 49 percent is a step in the right
direction,” said Pratyush Kumar, president of Boeing India, which has
secured two-thirds of the defense trade with the United States.
“Qualitatively, nothing changes because it doesn’t give control to the
foreign investor.”
Analysts say India has speeded up defense decisions.
The
United States and India have hastened discussions since May on specific
projects for co-production, such as antitank guided missiles,
carrier-based aircraft launching systems and unmanned aerial vehicles,
said Rahul S. Madhavan, director of aerospace and defense policy at the
U.S.-India Business Council in Washington.
“These are not offers
that come every day,” he said. “India is now almost on par with NATO
countries if you look at the kind of defense technology that are being
offered by the U.S.”
But critics say India is being torn by two
competing goals: the nationalistic aspiration to produce weapons locally
and the urgent need to fix the crippling shortages in the military.
The armed forces are desperate
for new helicopters, submarines, combat jets and minesweepers, but even
its tanks do not have enough shells. Soldiers are demanding lightweight
bulletproof vests, assault rifles, night-vision equipment, combat boots
and helmets.
In the past decade, key decisions on military
acquisition have been delayed. Analysts call former prime minister
Manmohan Singh’s two terms “the lost decade” for India’s defense sector.We lost a decade when absolutely nothing moved,” said Arun Prakash, a
retired navy chief. “The last government blacklisted so many defense
companies just at the hint of wrongdoing that the military was left with
almost no sources to buy from. Purchases are put on hold,
investigations go on interminably or are just forgotten. That has been
really damaging to the armed forces.”
Officials say the
government is likely to overhaul the policy of mandatory obligations to
invest in India and align it closely with Modi’s manufacturing drive.
Despite
the push, many defense experts say India is not ready to make a giant
leap like China’s — from being the largest arms importer in 2006 to
becoming the world’s sixth-largest defense exporter by 2011.
“Becoming
a defense exporter is a noble aspiration but it will take a lot of
doing,” Prakash said. “Given the current state of our defense research
and industrial base, it is not something that will happen overnight.”
washingtonpost
