India to boost arms output, fearing shortfall from Russia

Published April 7, 2022
Indian Prime Minister Narendra Modi unveils the logo of 'Make in India' initiative in New Delhi, India, Sept 25, 2014. ⁠—⁠ AP/File
Indian Prime Minister Narendra Modi unveils the logo of 'Make in India' initiative in New Delhi, India, Sept 25, 2014. ⁠—⁠ AP/File

India on Thursday said it would ramp up its production of military equipment, including helicopters, tank engines, missiles and airborne early warning systems, to offset any potential shortfall from its main supplier Russia.

India depends on Russia for nearly 60 per cent of its defence equipment, and the war in Ukraine has added to doubts about future supplies.

Defence Ministry officials say India, with the world’s second-largest army, fourth-largest air force and seventh-largest navy, can’t sustain itself through imports.

“Our objective is to develop India as a defence manufacturing hub,” Defence Minister Rajnath Singh said on Thursday while releasing a list of military equipment that will be produced domestically and no longer imported.

Read more: India unsure of Russian arms to meet China, Pakistan threats

The ministry’s website said military orders worth $28 billion are likely to be placed with domestic state-run and private defence manufacturers in the next five years.

Former Lt Gen DS Hooda said that during a visit to India last year by Russian President Vladimir Putin the two sides decided to shift some manufacturing to India to meet its requirements. Imports of helicopters, corvettes, tank engines, missiles and airborne early warning systems will eventually be halted.

“The requirements of the Russian military itself, with the kind of losses that it is suffering, may mean some of those spares that we need will probably get diverted,” said Hooda, a retired Indian army general.

To meet its short-term requirements, India may consider purchases from former Soviet republics and Warsaw pact countries, the ministry officials said.

Bulgaria, Poland, Georgia, Kazakhstan and Ukraine could help India with spare supplies for Russian fighter aircraft Sukhois and MiG-29s and with upgrading tanks and armored vehicles as they have similar Soviet-origin platforms and spares, said a ministry official who spoke on condition of anonymity since he was not authorised to talk to reporters.

External Affairs Minister Subrahmanyam Jaishankar told his British counterpart Liz Truss during her visit to India last week that there is now an emphasis on “made in India” and that “the more collaborative we are, the possibilities of working together are more.“

The two sides discussed ways to strengthen Indo-British defence ties, apparently to reduce India’s strategic dependence on Russia.

India’s Defence Ministry has so far identified a “positive indigenisation list” of more than 300 items with a timeline for banning imports to help local manufacturers meet the requirements of the armed forces in the coming years.

India’s air force has more than 410 Soviet and Russian fighters with a mix of imported and license-built platforms, including Su30s, MiG-21s and MiG 29s. All require Russian spares and components. India also has Russian submarines, tanks, helicopters, submarines, frigates and missiles.

Sanctions on Moscow could jeopardise India’s recent $375 million BrahMos cruise missile export order from the Philippines. Russia’s NPO Mashinostroyenia, which formed a joint venture with India’s government-run Defence Research and Development Organisation to design, upgrade and manufacture BrahMos, is responsible for providing the missile system’s engines and seekers.

Rahul Bedi, a defence analyst, said India is awaiting deliveries of Russian missile systems, frigates, an Akula-class nuclear-powered submarine and assault rifles.

Prime Minister Narendra Modi’s government is pushing for greater self-reliance, but India lacks a strong industrial base for military equipment.

The process of shifting manufacturing of spare parts to India has begun, but Hooda said it was unclear if it could quickly make up for any shortfalls of supplies.

“I would say if you really want to see significant progress it will take at least five years,” he said.

India’s Defence Ministry has also signed nearly 60 offset contracts worth over $13bn by 2027 for purchases of fighter aircraft and weapons from the United States, France, Russia and Israel. The deals require 30-50pc of the contract value to be returned to India as offsets or re-investments.

An offset involves an obligation by a foreign supplier to buy a certain amount of goods from the importing country as part of the contract. India’s government wants part of that money to benefit its defence industry or to allow the country to gain in terms of technology. It involves setting up joint ventures with Indian companies to manufacture defence equipment.

The government announced in the 2022-23 budget that 68pc of all capital defence procurement would be for indigenous manufacturers.

Meanwhile, bilateral defence trade with the US increased from near zero in 2008 to $15bn in 2019. Major Indian purchases from the United States included long-range maritime patrol aircraft, C-130 transport aircraft, missiles and drones.

In 2020, India announced that foreign companies can invest up to 74pc in its defence manufacturing units, up from 49pc, without any government approval. The aim is to attract foreign companies with advanced technologies to set up factories in India in collaboration with local companies.

India fully opened its defence sector, previously confined to state-run companies, to the private sector in 2001. However, only 110 of the 330 private companies with industrial licenses for such manufacturing have begun production, according to the Defence Ministry.

Starting from scratch, India’s state-run Defence Research and Development Organisation began trying to develop advanced defence technologies in 1958. It has worked on short-range and long-range Agni and Prithvi missiles, Tejas light combat aircraft, tanks, multi-barrel rocket launchers, air defence systems and a wide range of radars and electronic warfare systems.

The Defence Ministry earmarked $135m for procurement from startups in 2020-2021.

The government has established two defence Industrial Corridors, in northern Uttar Pradesh and southern Tamil Nadu state, with investments of $2.7bn by 2024 by state-run and private sector companies.

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