Rafale
The European Union (EU) today faces practically no real military threat. Downsizing of the armed forces, shrinking budgets and the prevailing economic recession at home, make it necessary for the European Defence Industries to look beyond and find new export markets.
This will enable the EU to sustain its defence industries and help underwrite the huge investments in R&D. In addition, it is essential for EU to be able to independently defend its periphery and to retain capability of power projection.
India, a key Emerging Market
One of the emerging key markets for export and joint ventures is India. With increasing threat to India’s security and territorial integrity from the authoritarian regimes in the neighbourhood, there is an urgent need to upgrade the Indian defence industries, re-equip the armed forces as also the Para-military and police forces with modem weaponry. The budget for modernization of the military alone in the next twelve years is slated to cross 200 billion dollars.
With mounting threats, India has no option but to import modern weapon systems as well as to open the Indian defence industry to international collaboration.
India, a multi-cultural democracy in Asia with young, technically savvy demographic profile, is naturally attractive for the European defence industries both in terms of the size of the market and a fairly similar geopolitical outlook.
In India, the government-controlled defence industries are out of sync with the requirement of the armed forces. They are mired in red tape due to bureaucratic controls and have not been able to meet even the minimum requirements of the Indian Armed Forces. The Defence Public Sector Units and the Defence Research and Development Organisation (DRDO) have squandered massive allocation from the defence budgets over the years without any concrete results. India is unable to produce a fighter aircraft or even an assault rifle. The rapid march of defence technologies in the West make the state defence industries in India look ancient and archival. With mounting threats, India has no option but to import modem weapon systems as well as to open the Indian defence industry to international collaboration.
Paucity of budgets in the West and democratic India’s need to rapidly modernize its forces creates a rare synergy for partnership in the 21 st century. Further, the aging population in Europe will need the technically savvy young demographic profile of Indian origin to maintain lead in research in cutting-edge defence technologies.
The main competitors for the Indian market are the defence industries of the US, Europe, Israel and the Russia. During Cold War politics, India depended on Russia for supplies of military hardware due to the geopolitical equations that existed at that time. However, Russia today is unable to supply in time or provide the cutting edge technologies that India needs. In the new world order, with other options available, India has diversified sources of import of military hardware.
India looking for Transfer of Technologies
The emerging trends indicate that India is willing to collaborate more and more with countries that will transfer technologies along with the hardware. European defence industries fit the bill besides those in the US and Israel.
“We are more than Pakistan at this time, it’s not just Pakistan, what we are saying is that we need to maintain this force level at least in the 12th Plan Period. We will not allow it to go below 34 and it is only in the 13th Plan that we will start going up to 42,” said Air Chief Marshal Browne.
The international players are definitely frustrated with the Indian bureaucratic red-tape, repeated cancellation of tenders, inconsistency in decision making, time consuming requests for extension of offers, and change in policies for investors. Cancellation of tenders such as those of 155mm artillery guns and helicopters etc does not boost confidence and the costs go up for the Indian taxpayer. The lopsided policies of blacklisting companies on corruption charges are also creating an unnatural strain in relationships.
However, with enormous pressures on the government for modernization of the armed forces, the policies are slowly but surely changing. The private sector is increasingly finding space as Tier-l supplier. The Tata Group, Larsen & Toubro and Mahindra & Mahindra are the front-runners to undertake major aerospace related work. The state owned Hindustan Aeronautics Limited (HAL), which is overwhelmed with the past commitments, has been denied the design and manufacturing of the basic trainer aircraft. The foreign firms are now allowed flexibility in selection of local partners.
MMRCA
India’s hunt for the acquisition of 126 Medium Multi-Role Combat Aircraft (MMRCA) closed, when the Ministry of Defence selected the French Rafale fighter. The aircraft was chosen as Dassault was the lowest bidder on the basis of its lifecycle cost and technology transfer. The total deal is worth 20 billion dollars with inbuilt options for further orders. According to negotiations, 18 Rafale fighters will arrive in India from mid-2015, with another 108 to be built in India under collaboration. The commercial negotiations are in the final stage and likely to be sealed within this Indian fiscal ending March 31.
The IAF has plans to build up its strength of combat squadrons to 42 over the next five years as against the current level of 34. “We are more than Pakistan at this time, it’s not just Pakistan, what we are saying is that we need to maintain this force level at least in the 12th Plan Period. We will not allow it to go below 34 and it is only in the 13th Plan that we will start going up to 42,” said Air Chief Marshal Browne. The IAF Chief further said that Air Force was looking forward to acquire GSAT from the Indian Space Research Organization. The Air Chief also clarified that the IAF was keen on upgrading its fleet of Jaguar aircraft, which has a proven record of reliability. The exercise may take up to three years to complete. The IAF today has the biggest fleet of Jaguar with 90 aircraft in five squadrons.
Naval needs an French Cooperation
By 2015, India is expected to commission its first Scorpene submarine being developed by the French naval construction group DCNS. The state-owned Mazagon Dock Limited (MDL) will produce six SSK Scorpene submarines (P75) under Transfer of Technology from DCNS at a cost of 3.7 billion dollars. Simultaneously, DCNS India, its Indian subsidiary, is working on the selection of Indian companies as partners for local production of components for the Scorpene. DCNS India signed a contract with SEC Industries for the manufacture of high technology equipment for the P75 Scorpene submarines in September 2011 and the second contract was signed in May, 2012 for additional items. The remaining five submarines will be delivered by 2018. Bernard Buisson, Managing Director of DCNS India, said these contracts cover comprehensive Transfer of Technology. India has received investments of3.7 billion dollars so far under the ‘Indian Defence Offset Policy’ that mandates foreign defence equipment suppliers to invest 30 per cent of the contract value in Indian companies.
Speaking on the partnership between DCNS and Pipavav, Patrick Boissier, DCNS Chairman and CEO stated: “Through the P75 Scorpene submarines, the on-going indigenization programme and DCNS India, we are working to enlarge our footprint in India. This strategic partnership with Pipavav again demonstrates DCNS’ confidence in the growing capabilities and long term development of the Indian Defence industries”. Pierre Legros, DCNS Head of the Surface Ships division concluded, “DCNS’s pledge is to become a key technology and Know How Provider (KHP) to Pipavav. Our objective is to propose modem manufacturing processes together with state-of-the-art platforms. DCNS is committed to transfer the technologies needed to support India’s National security needs”. The partnership is expected to boost India’s drive for self-reliance in the field of defence manufacturing and to create a large number of local jobs. It will further cement the Indo-French strategic relationship in the defence sector.
Pipavav Defence and Offshore Engineering Company Limited teamed up with French company DCNS, a world leader in naval defence, energy systems, shipbuilding and systems integration, to build modem warships for the Indian Navy and Coast Guard. Pipavav, the first private company to partner naval defence manufacturing in India, was chosen by defence PSU Mazagon Dock Limited to form a joint venture to build warships for the Indian Navy. Pipavav is expanding its footprint in the defence weapon systems too.
From Aircraft to Missiles
The Cabinet Committee on Security (CCS) under the chairmanship of the Prime Minister cleared a 950 million dollars deal for the procurement of 490 Air-to-Air missiles from MBDA, the French firm, for the IAF’s Mirage 2000 aircraft fleet.
The Mirage 2000 fleet is under mid-life upgrade with Dassault and Thales in France. Two aircrafts are already in France. The rest will be upgraded at the HAL facilities in India. The contract with MBDA carries an offset obligation of 30 per cent of the contract value. MBDA has a joint venture with state-owned Bharat Dynamics Limited, India’s missile manufacturer, and will execute the offset obligations accordingly.
UK, the Historical Partner
India’s historical relationship with the British and its large defence industries is well recorded. In the past India acquired from Britain a variety of equipment such as Leander class frigates, Centurion tanks, Vampires, Canberra, Hunter and Gnat aircrafts. However, British support for Pakistan and interference in Kashmir subsequently diluted the relationship. They made a comeback in 1979 with India ordering 179 Jaguars. It was cemented further in 2003 with India procuring 66 Hawks trainer jets worth 1.7 billion dollars and in 2010 placed additional orders for 57 Hawks to be manufactured by HAL. Britain now offers Indian participation in Global Combat Ship (GCS) and there is fruitful tie up between DRDO and British DSTL (Defence Science and Technology Lab). Meanwhile BAE contracted to supply 140 Ultra Light Howitzers. In addition, it tied up with Mahindra Group to create a Centre for Excellence to gain a role in modernization of Indian artillery.
Europe, a Solid Footprint
Germany, the fifth largest exporter to India supplies parts involved in construction of ship, submarines, planes, helicopters and tanks. Earlier it exported submarines (Type 209) and a large number of Dornier aircraft. In recent times, the defence and security cooperation improved with visits of Service Chiefs. However, Germans had a setback with cancellation of 197 Helicopters deal after Eurocopter won it. Similarly, as a stakeholder in EADS though lowest, it lost on cancellation of the tender for six Airbus Military refuellers. India should avoid such whimsical inconsistencies in policymaking as there is a loss of goodwill and the vendor’s investment is written off. It is natural that in subsequent bidding the costs get escalated.
Italy provides consultancy for the indigenous aircraft carrier, heavy weight torpedoes for submarines and frigates. Finmeccanica’s subsidiary Augusta Westland bagged the order for twelve 101 Helicopters for VIP transport. There is a tie up with Tata & Sons to assemble 119 A W helicopters.
To obtain economy of scale, pooling of resources within European countries and sharing of the manufacturing process is a common practice. Therefore, most of the European companies are multi-national and inter-linked with the American defence industries. Indian defence industries, both state owned and private, need to consolidate within and also join the global supply chain in a similar fashion. To gradually reduce dependency on imports to a large extent over a period of time, FDI in Indian defence sector should be increased from 26% to 74% at least so that new manufacturing facilities are set up in India to enable her to emerge as an alternative defence manufacturing hub in Asia, and in times to come as net exporter.
With open sky policies since 2003, the requirement in India’s civil aerospace sector adds to the enormity of the market.
Within Europe, the French who have secured Scorpene and MMRCA deal with Rafale are in the lead but others are not far behind. The European defence industries continue to increase their footprints as the Indian civil and military industries remain highly alluring.
This article was First Published in EDR – European Defence & Security Review – Jan-Feb 2013.
Please wait...
I live in the Uk what get me is the way the British Government members are criticizing the Russian leader, the British provoke the Russian. I am well aware that how strong the Russians are the have an Army over 2 million and we the British has the Army of fewer than 100000. The Russians are 20 times bigger than the uk, Europe could not get more 300000 that is – 1700000 man less. The Americans think they can walk over Russia just like they did in Vietnam, Afghanistan, go dreaming America they will be in Paris in 3to 4 days.
With mounting threats, India has no option but to import modern weapon systems. This is because India has not had the brains to set and plan for this industry dispite having the money to so ?
Continued…
This is also why the “West” approves, so strongly, of India’s “social engineering” Constitution that was written by the British and plagiairzed by Jabberlal, Ambedkar et al. It is this Constitution that keeps India technologically dependent. and in 18th Centiry servitude to Colonial surrogates..
Europe sells weapons for proxy wars just like the US does, but minimizes its own involvement. Recently we had Prince Charles dancing in his night dress around a fire in the middle of the Saudi desert waving a sword around his head in an effort to exchange British weapons for Petro Dollars. Weapons, wars, (aka terrorism when the intensity is low enough) genocides, war crimes and Petro Dollars. This is the cement that holds the US-NATO-Sunni Axis which was forged by Nixon, Kissinger and Saudi Sheikh Yamani together.. The Axis would find it unacceptable if Pakistan did not continue its Ghazwa e Hind and other Islamic projects. So would China that is taking a substantial slice of the Pakistan arms pie having supplied Missile and Tactical (Battle field) Nukes and know how, combat aircraft technology and in agreement to supply stealth technology. The US is desperate to protect its Pakistani turf that it has nurtured since the SEATO / CENTO days and using its influence to support Saudi funds to give Pakistan its first nuclear bombs. Recently, Obama, after abusing Indian hospitality in January 2015 by starting off a “tolerance” chorus of Indian Fifth Columnists obligated to the White Hice and Petro Dollars dropped a Billion Dollars worth of lethal weapons into Pakistan’s waiting lap in November 2015. This included system for dropping Pakistan’s nuclear war heads deep into Indian territory and attack helicopters that enable Pakistan, with Chinese help, to prosecute its war crimes in Balochistan in a redux of how Nixon defended Pakistan’s right to practice Islam (chroreographed mass rapes, genocide, sex slavery and so on) in erstwhile East Pakistan Promptly thereafter, reminiscent of a Donald Duck cartoon (where Donald intsals a fdoor lamp on one house, shows it to the neighbour who buys one. He then removes the first door lamp and shows the sold one to obtain another sale), the US offered F-16 and F-18 technology to India.This is also why the “West” approves, so strongl