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India’s Puzzled Military Industrial Complex

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India’s Puzzled Military Industrial Complex

India’s diversification of arms partners has led to a trust deficit with major suppliers, who could be reluctant to transfer the technology New Delhi requires to truly indigenize its defense industry.

India’s Puzzled Military Industrial Complex

A C-17 Globemaster, imported from the U.S., in the Indian Air Force.

Credit: Indian Air Force

In March 2024, the Stockholm International Peace Research Institute (SIPRI) released its annual report on international arms transfers for 2023. SIPRI’s much-anticipated lists of exporters and importers raised a serious question about India’s big claims about its growing military-industrial complex. 

According to data from the government, India’s arms export for fiscal year 2023-24 reached to 210.8 billion rupees (around $2.5 billion), an increase of 32.5 percent from 159.0 billion rupees in FY2022-23. According to SIPRI’s 2021 report, India had entered the club of the top 25 arms exporters, reaching 23rd position. The success in arms exports fueled India’s expectation to cut its foreign dependence while promoting the domestic arms industry to fulfill the military needs of the Indian armed forces and friendly foreign countries.

Despite the surge in arms exports, however, India dropped back out of the list of top 25 arms exporters in SIPRI’s 2022 report and remained out of the group in 2023 as well.

Meanwhile, India still retained its position as the top arms importer, sharing 9.8 percent of the overall imports between 2019 and 2023. Moreover, India’s imports actually grew by 4.7 percent between 2014-18 and 2019-23. 

SIPRI’s latest report shows two important trends in India’s arms acquisition – the surge in defense imports, despite several policies and initiatives to cut foreign dependence, and an increase in India’s arms import partners.

Since 2020, the government of India has taken multiple initiatives to reduce India’s arms dependence on foreign partners. Atmanirbhar Bharat and the Defense Acquisition Procedures (DAP) were among the major steps of the government to promote domestic arms manufacturing. The Export Promotion policy under the vision of Atmanirbhar Bharat set an ambitious target of establishing a domestic arms industry worth $25 billion by 2025.

By formalizing the DAP in 2020, an emphasis was placed on procuring arms from domestic vendors under the Indian-IDDM (Indigenously Designed, Developed, and Manufactured) category, with at least 50 percent indigenous contents. To pursue self-reliance in defense manufacturing, the Department of Military Affairs (DMA), since 2020, has been releasing Negative Import Lists or Positive Indigenous Lists (PIL) of major arms, platforms, systems, and ammunition, to put an embargo on their imports and expedite their domestic productions in a regulated time frame. So far five lists have been released by the DMA containing 509 items.

These initiatives even bore fruit but for a limited period, when India bagged the 23rd position in the list of major arms exporters in FY2021-22. In FY2022-23, however, India could not sustain its position and dropped from the list of top 25 suppliers. India’s arms import also increased from 9.1 percent of total global arms imports during 2014-18 to 9.8 percent in 2019-23. 

Currently, Indian vendors lack the technology and innovative skills to develop and upgrade quality arms. These trends raise serious concern over India’s big claims and highlights its domestic manufacturers’ poor situation. Low production capacity under stipulated timelines and quality assurance are major challenges, besides tough competition from foreign vendors. Low-tech weapons with technical and mechanical glitches are not likely to be attractive, either to India or to foreign armed forces. 

The increase in arms imports despite several initiatives to indigenize India’s defense industry should inspire us to re-think and re-evaluate the existing policies to plug the loopholes.      

Arms transfers play a key role in shaping foreign policies and securing national interests. India is known for its tradition of importing arms from multiple sources. As major arms suppliers, the prevailing bipolar international order during the Cold War allowed the United States and the Soviet Union to dominate the foreign policies of their recipients. India’s resort to alternative options for arms supplies, which stemmed from the Cold War days, has continued to date. India’s arms acquisition decision-making has been coupled with the adoption of non-alignment during the Cold War era to an “all-alignment” strategy under the umbrella concept of strategic autonomy in the current era. 

Diversification of arms partners had been a cornerstone of India’s policy and remained a favorable option to undermine the hegemony or political dominance of the suppliers. In terms of exporter’s share percentage, India was among the top three recipients of each of the five major suppliers in the list of top 25 exporters between 2014 and 2018. India accounted for 31 percent of Russia’s exports, 30 percent of France’s, 13 percent of South Korea’s, 37 percent of Israel’s, and 15 percent of South Africa’s. During 2019-23, India was receiving arms from seven major exporters: France (with India at 29 percent of France’s total exports), Russia (34 percent), Israel (37 percent), South Korea (15 percent), Ukraine (11 percent), South Africa (13 percent), and Poland (0.6 percent). India’s 4.7 percent surge in arms import saw the entries of Ukraine and Poland as emerging options.

Although diversification has maintained strategic autonomy in India’s foreign policy and arms acquisition decision-making, the policy has also created a trust deficit among its import partners such as the United States. To establish a sound military-industrial complex, India doesn’t need mechanical equipment alone, but rather sophisticated technologies and innovative capability wherein the United States enjoys supremacy over all other suppliers. 

The United States and India are not formal military allies but strategic partners with common challenges and opportunities. In 2016, the U.S. extended India the status of Major Defense Partner (MDP), which would allow India to enjoy the benefits of sophisticated arms technology usually offered only to the United States’ formal allies and NATO partners. 

Yet due to diversification – particularly India’s arms trade with Russia – the United States has been reluctant to share technology with Indian companies. That is probably the prime reason behind the failure of the Defense Trade and Technology Initiative, an ambitious initiative launched by U.S. Deputy Defense Secretary Ashton Carter in 2012 to promote defense cooperation and transfer of technology while ensuring co-production and co-development of arms in India. 

India has been cautious about its global image, which also dictates its foreign policy to avoid over-dependence on traditional partner. India seeks to remain neutral, with freedom to pursue its strategic and national interests. Strategic autonomy is undoubtedly the best bet for India; however, having too many options creates trust issues with potential partners, which hinders strategic and technology cooperation. In arms acquisition decision-making, India needs to consider these issues while re-emphasizing its policies to balance diverse approaches to establish an effective military-industrial complex.