Indian Defence Review

Amid the intensification of insurgency, civil war, and ethnic conflict throughout Eastern and Southern Africa, as well as through the conflict-ridden Sahelregion, the prospect for arms sales on the African continent remains an emerging frontier for the global defense industry. With former colonial powers like France and the United Kingdom having significantly pared their military footprint on the continent,and the United States Africa Command (AFRICOM) signaling its intent to continue phased drawdowns, the onus is expected to shift toward the continent’s regional powers, many of which possess militaries in need of modernization. 

Stepping in to address these needs is a number of new entrants, as well as existing powers, that have expanded their Africa presence in both a military and commercial capacity.The decision of China, one of the continent’s leading investors, to install its first overseas military base in Djibouti (which plays host to an increasing number of foreign militaries) is but one example of a broad trend of active powers leveraging military resources to achieve economic aims in African markets.The entrance and interest of powers such as Japan, Turkey, Saudi Arabia, and the United Arab Emirates further emphasizes the critical role that the African continent is likely to play going forward in the realm of economic and security interests.

Although a recent study conducted by the Stockholm International Peace Research Institute (SIPRI) reported a slowdown in African arms imports, the study’s design neglects transfers and sales of small arms and light weapons (SALW). Such weapons remain pivotal to military efforts to combat the growing threats of groups such as Boko Haram, Al-Shabab, and Al-Qaeda in the Islamic Maghreb (AQIM).Given that few countries on the continent possess the financial wherewithal to purchase sophisticated weaponry, the exclusion of SALW likely conceals the true state of the African market for arms sales. In addition, the formation of multilateral initiatives such as the G5 Sahel and ECOWAS, indicates that the continent’s appetite for low-cost weaponry is unlikely to dissipate soon.

For years,China’s ability to offer favorable financing options and bulk sales of small arms and light weapons to African nations in part explain sits precipitous rise as the world’s fifth largest arms exporter. Nevertheless, the involvement of Beijing’s economy, coupled with hefty investments in emerging defense technology, has resulted in an increase in labor wages and dwindling price advantages in the SALW space.

Furthermore, the consolidatory nature of the defense industry has compelled heavyweights in the United States and Europe to focus on product lines that offer healthier profit margins. Domestic considerations have also compelled Beijing to reorient its priorities in accordance with the “Made in China 2025” initiative, which emphasizes a shift from low-cost production to high-value goods and services.  As a result, the industry’s largest firms continue to allocate investment in emergent areas, such as autonomous systems, cyber-security services, and next-generation combat aircraft. These sophisticated demands,driven by the consumer tastes of militaries across the APAC (Asia Pacific) and MENA (Middle East and North Africa) regions, where import volumes are among the highest in the world, provides an opportunity to seize market share in less sophisticated domains.

Such conditions bode well for nascent, embryonic defense manufacturing industries, like that of India’s. With export valuations having more than doubled in the past two years, India’s indigenous defense industry is primed for offering high-volume, low-margin products in realms like SALW, ordnances, and small vessels for naval forces. Each of these areas fulfills unaddressed needs of African militaries, while bolstering India’s manufacturing capacity and enabling maturity in high-end military goods and services.

Momentum from recent successes, such as the Modi government’s liberalization of foreign direct investment (FDI) regulations in the defense sector, are likely to improve future outcomes by encouraging joint ventures. Deregulation in the sector is likely toexpand access to capital, while pairing knowledgeable partners in the space, such as Russia and Israel, with capable manufacturers across India. Such ventures would not only earn plaudits for the Modi government’s “Make in India” campaign but would also allow for opportunities of technology transfer that would benefit the Indian Armed Forces.

However, failure to obtain technology transfer agreements would only make the industry more susceptible to bottlenecks that would interrupt production and deter investment. Given India’s over-reliance on imports for components and technology to produce its domestic successes, such as the Arjun tank, technology transfer remains a priority for its burgeoning domestic arms industry.

While the rationalization of indigenization initiatives remains driven by reducing import reliance, India also enjoys a competitive advantage in the area of pricing and cost, which must be harnessed to fuel continued investment in the domestic arms industry. Doing so would also enable the Modi government to meet its ambitious target of $5 billion USD in annual defense exports. Put simply, frontier markets like those found across Africa are pivotal to India’s efforts inlifting export volumes in the defense sector.

In regard to India’s role in the continent’s conflicts, commercial interests for the country’s defense manufacturers are expanding, albeit slowly. India remains one of the largest manpower contributors to UN peacekeeping forces deployed in African missions and its track record for training African officers is likely to garner goodwill among its partners on the continent, at a time where traditional Western powers are entertaining retrenchment from African missions.

As India’s engagement with the African continent continues to flourish economically, so too does New Delhi’s incentive to bolster the continent’s security capabilities. Integration of African economies, via the Africa Continental Free Trade Agreement (AfCFTA), is likely to fuel demand for military goods and services in domains which India enjoys competitive advantages.

Nevertheless, it remains to be seen whether the Modi government can successfully leverage the relationship to cinch arms deals.Export control regulations remain a key bottleneck, and until more government support can be earned in this area, opportunities to fulfill the demands of the African market remain squandered. 

Thus, export controls, coupled with incentives for private-public sector cooperation will likely need to be implemented if the Modi government’s intentions to build a sufficient domestic arms industry are sincere.