RS 72 India s defence and security policies: fighting on all fronts

RS 72 India s defence and security policies: fighting on all fronts By Adam Dempsey, Research Associate, UK Defence Forum Introduction Despite the 2008 terrorist attacks on Mumbai, India s defence and security policies have remained consistent. India continues to regard the global security environment as dynamic and subject to threats that transcend international borders. The South Asia region remains India s principal security c0ncern. India believes that the greatest threat to regional stability is the combination of terrorism nurtured within Pakistan and their military s compulsive hostility towards its larger neighbour. This includes manifestations of Pakistan s tacit support for Afghanistan s Taliban. This also results in concerns that Islamic fundamentalists may gain access to Pakistan s nuclear arsenal. India also remains wary of the nuclear threat posed by both Pakistan and China. India is concerned that all its major cities are within reach of Chinese nuclear missiles. Such concerns are further exacerbated by the People s Liberation Army Navy s increasing blue-water capabilities. India s defence industry Between 2000 and 2008 India s defence budget increased by 50% in real terms. Following the Mumbai attacks, India s 2009/10 defence budget was increased by a third to $32 billion. Out of this total, $8.5 billion was allocated for the acquisition of major armaments for the armed forces. Additional funds were also allocated for arms and equipment for India s police. The opportunity to increase expenditure reflects the government s desire to see defence expenditures reach 3% of India s gross domestic product. India also believes that it should be capable of producing 70% of its required military equipment. However, India remains the largest weapons buyer among emerging countries. Since 2000 India has purchased $28 million worth of equipment from the global defence marketplace. Currently, India s defence industry is capable of supplying only 30% of the armed forces equipment needs. Such low levels of procurement reflect the slow development of India s defence industrial base. Traditionally, India s defence industry consisted of nine state-owned companies. Between 2007 and 2009 these companies exported military products worth approximately $1oo million. By comparison, in 2007 India s IT industry exports totalled approximately $36 billion. Page 1 of 5

India s traditional defence industries have also been unable to deliver projects on time. Projects such as the Light Combat Aircraft (LCA) and the Arjun battle tank fell more than a decade behind schedule. Furthermore, the Kaveria aircraft engine designed for the LCA fell 20 years behind its scheduled completion date. By 2001 India began to encourage the development of a private defence sector. It is anticipated that private industry would operate as a sub-contractor to the larger firms. In recent years a number of measures have been introduced to stimulate private sector involvement in India s defence industry. These include the publication of Defence Procurement Procedures (DPP) which favour indigenous programmes; provisions that allow overseas companies to invest up to 26% in domestic companies and offset obligations amounting to at least 30% of a defence contract. In 2007 the Champions of Industry initiative was launched. Under this scheme private companies were granted benefits previously limited to the public sector. It was proposed that the private sector should be eligible to produce equipment traditionally supplied by India s public defence companies. The scheme also made provisions for the allocation of funding for research and development and duty-free importing of equipment. However, Champions of Industry has been opposed by India s left wing politicians. As of 2010 the policy has still to be introduced. The successful implementation of Champions of Industry would have ideally complemented a new DPP category known as buy and make Indian. Under this scheme request for proposals (RFP) can now be issued to private companies that have the requisite financial and technological capabilities. Previously RFPs could only be issued to foreign vendors who were then required to transfer technologies to domestic companies. But without the support of Champions of Industry it is difficult to assess the extent to which buy and make Indian will boost the private defence sector. Accordingly, until India s nascent private defence sector matures the state will continue to look overseas for the bulk of its defence equipment. International partnerships India s procurement strategies closely mirror its foreign policy. As Russia supplies India with 70% of its overseas imports Moscow remains a crucial partner. On March 12 th 2010 India signed a $1.5 billion deal with Russia to purchase 29 MiG-29 fighters. The deal was struck whilst Russian businessmen and politicians visited India. The visit was also expected to yield further arms sales and nuclear energy deals worth over $10 billion. In 2001 India and Russia Page 2 of 5

started development work on the BrahMos supersonic cruise missile system. This resulted in the formation of BrahMos Aerospace, an Indo-Russian partnership worth $10 billion. BrahMos Aerospace is confident that the BrahMos is the fastest and most cost-effective cruise missile system ever built. The BrahMos can fly at a speed of 1 kilometre (0.62 miles) a second, carries a 440-pound (200-kilogram) conventional warhead and has a range of 175 miles (280 kilometres). BrahMos are also confident that the missile system will have no serious competition from American and European manufacturers for the next 10 15 years. Yet the apparent success of BrahMos Aerospace has not been replicated within other Indo- Russian ventures. In 2004 India signed a deal with Russia to purchase the ex-soviet Admiral Gorshkov aircraft carrier. India initially expected to pay $1.5 billion for the carrier. The cost was to include a $948 million refit with the balance to be used to purchase aircraft for the vessel. However the final cost of the Admiral Gorshkov was $2.9 billion. The purchase has also been criticised by the Comptroller and Auditor General (CAG) of India. The CAG s report observed that the Indian Navy will be acquiring a second-hand ship with a limited lifespan. It also estimated that the purchase of an entirely new aircraft carrier would be 60% cheaper than the Admiral Gorshkov programme. The CAG also highlighted that the antiaircraft missile complex failed during trials and that a Close-in Weapons System is unlikely to be fitted until 2017. To overcome such problems India has expanded partnerships with other states. India regarded the end of the Cold War as an opportunity to transform its relations with the United States. Indo-U.S. relations were further transformed after the terrorist attacks of 9/11 and the assault on the Indian parliament in December 2001. In 2002 enhanced bilateral engagements on defence and security resulted in the rejuvenation of the Indo-U.S. Defence Policy Group (DPG). Alongside the DPG, New Delhi and Washington holds meetings within the Security Cooperation and Joint Technical Groups. These groups aim to enhance the Indo-U.S. defence supply relationship and stimulate joint cooperation on research and development. In 2005 Indo-U.S. relations were also strengthened with the creation of the U.S.-India Defence Framework. This agreement led to the formation of the Defence Procurement and Production Group. Since the completion of this agreement defence exports between the United States and India have been steady. On the 1st January 2010 India announced the purchase of six Lockheed Martin C-130J Super Hercules Airlifters. This was followed on the 8th January by a letter of request to Boeing to purchase ten C-17 Globemaster III. These purchases seek to augment the Indian military s capacity for quickly airlifting troops to the Pakistani border and to combat terrorism and low-intensity warfare. Page 3 of 5

Yet increased defence cooperation is hampered by India s domestic politics. The Indian government has not signed the Communications Interoperability and Security Memorandum of Agreement, the Logistics Support Agreement, and the Basic Exchange and Cooperation Agreement for Geospatial Cooperation. These agreements are crucial to the provision of logistical support and exchanges of equipment related to defence purchases. Under U.S. law such agreements need to be signed to legitimise overseas defence sales. However, the Indian government faces domestic opposition to these agreements over sovereignty concerns. Indo-Chinese relations India also sees enhanced regional cooperation as an opportunity to counter the influence of China. In December 2009 India and Japan upgraded security ties through a Defence Action Plan (DAP). The DAP creates a framework for increased cooperation in maritime security and anti-terrorism. It is also envisaged that the DAP will lead to joint naval exercises and cooperation with ASEAN states. The DAP was agreed two months after the 12th ASEAN-China Summit in Thailand. Good relations with ASEAN will potentially lower concerns regarding India s plans for the Andaman and Nicobar island chains. India plans to upgrade weapons and equipment stationed at bases on the islands. This includes the stationing of Su-30MKI fighters and mid-air refuelling craft and the upgrading of airstrips to all-weather status. India also plans to locate medium and short-range unmanned aerial vehicles on the islands. These are likely to be used to observe China s military base in Burma s nearby Coco Islands and to monitor Chinese naval presence around Bangladesh. Despite defence policies that seek to contain the influence of China, New Delhi and Beijing have recently agreed to expand security cooperation. In January India s Defence Secretary met the deputy chief of the General Staff of the People s Liberation Army in Beijing. Amongst the issues discussed were India s concerns regarding China s naval build-up and boundary disputes relating to the Sino-Indian Line of Control. This meeting expands upon a memorandum signed in 2006 to conduct joint military exercises in the fields of counterterrorism and piracy. Yet what makes this meeting significant is that it is the first time an Indian official with the rank of permanent secretary has visited China for defence talks. However, the visit is unlikely to alter New Delhi s perception of China as outlined in the Indian Ministry of Defence s most recent annual report. China s defence modernisation and Page 4 of 5

any cooperation involving Pakistan will be closely monitored by India for the foreseeable future. Conclusions Whilst India s armed forces are amongst the largest in terms of manpower, they remain reliant on overseas exports for the bulk of their procurement needs. Although India is determined to develop its indigenous defence sector, domestic politics will ensure that it remains reliant on exports for some time to come. In its attempts to counter China, India maintains working relationships with states that share a vested interest in keeping Beijing in check. Such relationships safeguard India s globalised supply of weapons and equipment. They also present opportunities to improve India s domestic defence production. If India is to take advantage of such opportunities it needs to resolve domestic issues. Should India resolve these problems then the potential exists for more credible and independent defence policies. About the Author Adam Dempsey holds a BA in International Relations and Strategic Studies from Lancaster University and an MA in Intelligence and Security Studies from the University of Salford. His research interests focus upon how an increasingly networked global society impacts upon security and defence issues. He is particularly interested in the security policies of Russia, China, the Indian Sub-Continent and Latin America. Disclaimer The views of authors are their own. The UK Defence Forum holds no corporate view on the opinions expressed in papers or at meetings. The Forum exists to enable politicians, industrialists, members of the armed forces, academics and others with an interest in defence and security issues to exchange information and views on the future needs of Britain s defence. It is operated by a non-partisan, not for profit company. UK Defence Forum papers are archived at www.ukdf.org.uk - the last three years being accessible only to members and subscribers. Prior to that they are in the public domain subject to usual conventions. Members wishing to comment on papers can access a noticeboard via the members area of the website www.ukdf.org.uk April 2010 Page 5 of 5