By Prarthana Mitra
The government of India is set to invest a whopping $250 billion to revive India’s ageing defence arsenal against multiple external threats to national security. The Modi government is also currently mulling over adding to its current order for a new line of fighter jets.
Despite being one of the world’s biggest arms importers, India’s $620 billion defence industry has not encouraged or engaged in contracts with foreign arms dealers like Airbus in over five decades. Unnerved by the huge odds, European firm Airbus SE has already started building a supply chain to train and expand its existing local manufacturing partners, who already help the firm build commercial jets and other sophisticated parts for defence products.
Airbus isn’t alone in making such a move—over 650 local and foreign companies, including the likes of Lockheed Martin Corp., Saab AB, and Boeing Co. are poised to bid for the world’s biggest fighter jet order, which will be the main talking point at the government-organised defence expo, which will open its doors later today in Chennai.
Building a world-standard defence manufacturing hub
In keeping with Prime Minister Narendra Modi’s vision to build a self-sufficient domestic arms industry, the Centre now mandates that 30% of the parts in imported defence products must be made in India. This would require foreign firms, that normally function as assemblers rather than manufacturers, to convince other part-makers to invest in training the local units.
One of the world’s most prominent defence contractor, Lockheed, is pitching its F-16 fighter jets for a tender for 110 combat aircraft worth around $15 billion. The firm has also promised to move its entire production system for the fight jets to India, in the event of a successful deal. “This will put India right into the biggest fighter’s global supply chain immediately,” Phil Shaw, who heads Lockheed’s India operations, said in an interview in New Delhi. “That will give a leg up to what the government is looking for.”
According to a study by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Centrum Capital Ltd., the opportunities are immense, NDTV reported. India will reportedly set up a budget of $620 billion in the eight years to 2022, and local and foreign firms are expected to have business opportunities worth $168 billion.
“The fact that India ranks amongst the top ten countries in the world in terms of its military expenditure, makes it one of the most attractive markets for defence. This makes it a nobrainer for any foreign original equipment manufacturer (FOEM) that India should be on their customer list,” stated yet another FICCI study on India’s ammunition manufacturing industry.
“Several overseas defence companies, such as Expal of Spain, Nexter of France, Rosoboronexport of Russia, Chemring Group of the United Kingdom, Saab of Sweden, Elbit of Israel, Rheinmetall Defence of Germany, Diehl Defence of Germany, Denel of South Africa, Yugoimport of Serbia, Bumar of Poland, Orbital ATK Armament Systems of the United States and Arsenal of Bulgaria, are/were in talks with private Indian companies to provide cuttingedge technology for multiple Indian ammunition programs,” the study added.
However, defence-related decisions in India, and the entire procurement process is known to be riddled with a history of delays, backtracking, and corruption. Inaugurating the exhibition on Wednesday, Defence Minister Nirmala Sitharaman said that the government cannot compel Indian armed forces to buy indigenous weapons, as the choice depends on operational requirements.
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