Is India readying a military-industry combine?

February 21st, 2008 - 1:40 pm ICT by admin  

(News Analysis)
By Vishnu Makhijani
New Delhi, Feb 21 (IANS) Is India readying a military-industry combine to feed the voracious appetite of its armed forces and to push the hitherto nascent export of armaments? This is the distinct impression one gets from the response of global defence manufacturers to India’s newly enunciated Defence Procurement Procedure (DPP) that for the first time mandates technology transfers in all defence deals and 30 percent offsets in all deals worth over Rs.3 billion ($75 million).

Consider also the following factors:

Twenty memorandums of understanding (MoUs) were inked at the just-concluded DEFEXPO-2008 international exposition by US, Israeli and European firms with Indian majors like the Tatas and Mahindra and Mahindra in areas including manufacture of unmanned aerial vehicles (UAVs), missiles, electronic warfare systems and radars.

These MoUs will lead to a quantitative leap in the technological capabilities of domestic companies to feed foreign and domestic markets.

Then, companies like the Tatas and Mahindra and Mahindra have already developed considerable expertise in manufacturing a range of non-lethal military hardware - from where it is just a short step to weaponisation.

To better understand what this means, it would be relevant to recall what was said by Lt. Gen. (retd) S.S. Mehta, director general of the Confederation of Indian Industry (CII) that co-organised DEFEXPO-2000 along with the Indian defence ministry.

“I call this the second coming (after the liberalisation of the economy). Today, you have the private players taking on the more established public sector. The third coming will be when the public sector takes on the private sector,” he said, explaining the evolution that has taken place in India Inc. since the first edition of the biennial exposition in 1999.

“Till about six years ago (when defence manufacturing was opened to the private sector), state-owned companies did not have any competition and did pretty much as they pleased,” Mehta said.

“Now that there is competition, they are waking up to this and taking corrective measures. In the not too distant future, the public sector units, who have the distinct advantage of possessing massive infrastructure, will begin giving the private a run for their money.”

Then, consider the confidence with which the Defence Research and Development Organisation (DRDO) displayed a range of missiles it has developed indigenously, as also the BrahMos supersonic cruise missile it has jointly developed with Russia.

The Indian armed forces might have reservations about the efficacy of these weapons systems, but the defence research agency was confident it could win international orders.

Then, consider the importance India is attaching to arms exports.

“We are also looking at exports and while these are currently only at Rs.500 crores (Rs.5 billion or $125 million), we hope to see these rise as the Indian industry acquires cutting edge technology from around the world,” Minister of State for Defence Production Rao Inderjit Singh said during the exposition.

“Of course, we are first looking at the requirements of our armed forces and once these are met, we are definitely looking at exports,” he added for good measure.

Add to this the Rs.50 billion ($1.25 billion) of reinvestment that is expected to flow into the country in offsets as the armed forces are expected to buy Rs.155 billion worth of military hardware from abroad as part of their modernisation drive.

This has the potential of raising the technological levels of Indians in the public and private sectors to be on par with the best in world.

And add to this the enthusiasm of global arms players to transfer cutting edge technology to India.

“France is ready for complete transfer of technology,” said Jean-Marie Carnet, director general of GICAN, an umbrella grouping of 129 French companies engaged in the fabrication of naval ships and armaments.

“That’s why we brought only hi-tech companies (to DEFEXPO-2008) to demonstrate their capabilities. We have selected only those companies that could be of interest to India.”

To reinforce his point, Carnet said that France was not averse to the transfer of dual use technologies to India. “Of course it’s possible. If you want to be competitive, you have to incorporate civilian technology in military equipment so as to reduce the cost.”

This itself is a significant statement, considering that most Western nations - and particularly the US - are averse to exporting civilian technology that can be used for military purposes.

Given all this, it should not be surprising if the contours of India’s military-industrial combine start emerging in five years and it takes shape five years thence.

(The author writes on strategic affairs. He can be contacted at

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