By Nantoo Banerjee
Russia’s continuing support to help India build modern military ware, from guns to fighter jets, missiles and submarines, despite its growing critical defence supplies and technology tie-ups with China, is a clear example of the fact that the Indo-Russian relationship is unshakable by changing global power fulcrum. Trust is the key to the Indo-Russian defence and economic relationships. And, that played a key role in Russia’s fresh commitment to a 10-year military-technical cooperation pact that would see, among others, the manufacturing of AK-203 Kalashnikov rifles in India.
The two countries are prepared to deepen partnership with each other across all domains. Rosoboronexport, Russia’s top defence export organisation, expressed its readiness to give India technology for production of defence equipment. “Historically, from the very beginning…..not only we supplied military equipment but also provided assistance in organising its production, creating repair and maintenance facilities,” Rosoboronexport stated. The company worked closely with Indian authorities for licensed manufacture of multirole Sukhoi-30MKI fighter jets in India and helped modernisation of Indian Navy’s aircraft carrier, Vikramaditya. On its part, India has been a major investor in upstream oil and gas assets in Russia. It is keen to invest close to three billion dollars in the business. India has also been evaluating tie-ups in Arctic projects. The Russian government has offered some oil and gas fields to ONGC Videsh and any consortium they stitch together.
The formation of a joint venture, Indo-Russia Rifles, will help India procure 6,01,427 AK-203 assault rifles worth Rs.5,124 crore. India wants to build a strong military-industrial manufacturing base as it exists in countries such as the US, Russia, China, France, Italy, the UK and Israel. The Indian defence manufacturing industry can play a significant role in the country’s economic growth both through import substitution and export.
According to the Department of Defence Production, India’s defence manufacturing sector witnessed a CAGR of 3.9 percent between 2016 and 2020. The government has set a defence production target at US$25.00 billion by 2025. The country’s defence exports were estimated at US$1.29 billion in 2019-20. India’s defence import value stood at US$463 million for FY20 and was expected to be at US$ 469.5 million in FY21. India aims to export military hardware worth US$ 5 billion by 2025. The defence ministry is believed to have put some 101 defence items, including artillery guns and assault rifles, under import embargo to offer potential military hardware manufacturing opportunities to the Indian defence industry.
The joint cooperation with foreign suppliers appears to be the best route to fulfil India’s own defence manufacturing ambition since not many global players in armament manufacturing are keen to invest in India. Last year, India changed its foreign direct investment (FDI) regulations to allow investments of upto 74 percent in the defence manufacturing sector under its automatic route. This was an important decision for a sector that has been struggling to attract investment. However, the response so far has hardly been encouraging. The Department for Promotion of Industry and Internal Trade (DPIIT) data showed FDI inflow in the defence sector between April 2000 and June 2021 stood at only US$10.15 million.
Traditionally, Russia has been the biggest contributor to hi-tech defence production the country. While the US is known to have provided active support to India’s space programmes, its giant arms manufacturers such as Lockheed Martin, Raytheon, Boeing, Northrop Grumman, General Dynamics and L3Harris Technologies are little interested in manufacturing their lethal military hardware in countries such as India. Defence Minister Rajnath Singh has urged US defence companies to invest in India, asserting that the country is a strong and reliable investment destination in terms of co-production and co-development. The country is awaiting response from US firms.
Unfortunately, India is yet to witness much progress in the area of defence technology transfers from leading foreign equipment suppliers despite promises by their governments. For instance, although the Indian Air Force has partly taken delivery of Rafale jets, no technology has yet been transferred, raising questions over the fulfilment of the ‘commitments’ of the contract. The Comptroller and Auditor General (CAG) in its report recently tabled in Parliament said that the French manufacturer has not delivered on its promises regarding transfer of technology. “…It was found that the foreign vendors made various offset commitments to qualify for the main supply contract but later, were not earnest about fulfilling these commitments,” said the CAG report.
“For instance, in the offset contract relating to 36 Medium Multi Role Combat Aircraft (MMRCA), the vendors M/s Dassault Aviation and M/s MBDA initially proposed (September 2015) to discharge 30 percent of their offset obligation by offering high technology to DRDO (Defence Research and Development Organisation),” it said. “DRDO wanted to obtain Technical Assistance for the indigenous development of engines (Kaveri) for the Light Combat Aircraft. Till date, the Vendor has not confirmed the transfer of this technology,” it added. Similarly, India has bought weapons worth over $15 billion from the US over the past decade. But, there has been practically no technology transfers.
India must have a strong time-bound defence manufacturing programme in place, identifying the equipment, investment requirement, foreign financial and technological participation and production bases before it looks for partners, both domestic and foreign. It must find specific mention in the country’s defence budget approved by Parliament. The government needs to step up its spending on defence procurement and domestic manufacturing. In FY 2021, India’s $48-billion defence budget (excluding pensions), the world’s third largest, was too small compared to the top two — the US ($732 billion) and China ($261 billion).
Much of India’s defence expenditure go to maintain its personnel, which include 1.44 million active staff. India allocated only $18.48 billion for weapons procurement in its FY22 defence budget amid an ongoing military standoff with China. Excluding pensions, the current year’s defence budget totalled $49.6 billion. A large defence expenditure in much needed hi-tech military hardware and software would automatically attract higher investment in domestic arms manufacturing. Technology is the key. Thanks to Russian support, China is now the world’s 2nd biggest weapons manufacturer jumping ahead of Russia. If China had largely depended on Russia for sophisticated defence technology for production of weapons, there is no reason why India should hopelessly shop around the world for arms and armament technology when Russia remains committed to India. (IPA Service)