Opening Up India’s Defense Industry

Spearhead Analysis – 28.07.2014

By Shemrez Nauman Afzal
Research Advisor and Consultant (Security and Governance)
Spearhead Research – Pakistan

India’s Defense IndustryIndia has recently shifted gears on its drive to military modernization by 2020: will the proposed (and accepted) policies from the new BJP government make its indigenous defense industry more or less dependent? As India becomes the world’s largest importer of weapons, what is the impact of “liberalization” of the defense industry on obtaining military weaponry from external sources, latest technological applications from various fields of war, research and development particularly in security hardware (and software), and even sources of finance (particularly capital and investment) for the manufacturing sector of its defense industry?

The new BJP government in India, led by Prime Minister Narendra Modi and his senior advisor Arun Jaitley, the Union Minister for Defense and Finance, were reported to be considering various policies for “opening up” India’s defense industry: particularly to sources of foreign finance and capital. In the process of attracting international partnerships and creating synergies which include transfer of technology as a vital component, it may be argued that India would be making its indigenous defense industry – already lagging behind China and even Pakistani – less self-sufficient, and more dependent on both the West and its long-time ally, Russia, for military hardware in particular and latest battle software in general. As far as India’s experience with technology transfers goes, India has had a major treaty with Russia for decades, which has enabled the country to manufacture MiG’s and Sukhoi jet fighters (with Indian modifications) at home. The working of the treaty has not always been smooth and efficient, or exceptionally beneficent for India, as the case of the Admiral Gorschkov (a Russian aircraft carrier now inducted into the Indian Navy as the INS “”) clearly shows. Expanding this kind of relationship to Western countries – which means the U.S. and its NATO allies, such as the U.K., France, Germany, and others – may have its pitfalls along with the boons that India expects to achieve in terms of its strategic power and projection capabilities by 2020. The biggest downside for India is the amount of money that it will be spending itself on outsourcing its own defense projects to Western as well as Russian defense companies.

Since the end of the Cold War, and particularly in the last decade – when India’s nuclear weapons status (despite not having signed the NPT) was “sanctified” by the Nuclear Supplier’s Group (NSG) and it signed nuclear cooperation treaties with the U.S. – the South Asian superpower-aspirant has explored and established relations with Western countries for different kinds of weapons manufacturing as well as development. Its cooperation and collaboration with Israel on a wide variety of warfare technologies – from conventional weapons to intelligence coordination – and even tactics, strategy and doctrine of operational deployment(s) has gone on for decades: both countries share experience with each other regarding a continuing (but separate) militant threat from Islamic fundamentalist groups as well as insurgent organizations to both countries. India’s aspirations of becoming an international superpower are not limited to military modernization alone: India also wants to acquire a permanent seat (with veto power) on the United Nations Security Council (through UN structural reform) and is also playing an important role in the BRICS international alliance, which has recently set up a multilateral development bank with US$ 50 billion seed money. India wishes to back up its newfound role in the global capitalist economy with the commensurate military strength to protect its homeland, project its power in the region, and defend its economic interests abroad – particularly through the maritime routes in the Indian Ocean all the way to the African coast; a region where the Chinese Navy actively contests both India and the U.S. through its alleged “string of pearls” alignment of allied bases or naval bases under control.

Former Defense Minister A.K. Antony, who has served in this Union post for the longest tenure since 1947, is a critical opponent of the scheme to liberalize India’s defense sector – its industrial units and its various projects – and open it up to foreign monetary investment. He calls these attempts “suicide”, and is joined by many in the Indian defense establishment, the military bureaucracy, the indigenous defense industry, and even from politicians within his party. The counter-argument is simple: instead of becoming more self-reliant, India will become more dependent on the West for its own military requirements, whether it is in production terms or in development terms. In addition to that, India will only be an “operator” and not be able to become a “producer” (or seller, to be more precise) of the new weapons that it develops and puts into the battlefield, since bilateral treaties and the terms and conditions applied to multinational defense contracts would prohibit India from doing anything other than using these weapons their own selves. In the long run, India’s so-called “independent” foreign policy would become more compromised and more dependent on its alliance with the West and allied states, such as Japan, Taiwan, South Korea, etc. The compromise on the “independence” of its foreign policy by signing a nuclear treaty with the U.S. – the 123 Agreement, as it was known – cost the then-Congress led government the support of leftist legislators and communist/Marxist parties in the Lok Sabha, making their “United Progressive Alliance” government even more shaky and tenuous.

Since India loves to bask in the sunshine of praise and accolades from the West, whether from their media or their cultural organizations or their governments, it has now positioned itself as a major weapons buyer in the international market. With lots of money to spend, India is a favourite destination for security managers and high-ranking military officials who are engaged in “wooing India” so that they are awarded lucrative, billion-dollar deals. According to the thinking in North Block, India develops more strong military-to-military relationships with countries that are important in the international geopolitical arrangement, and can thereby also advance its diplomatic and economic leverage in terms of volume and pressure. In addition to that, technology transfers with Western military pioneers would also be in the offing, giving India access to potentially unlimited sources of developing their conventional and unconventional military strength in a lot of different dimensions. However, South Block – which houses the Defense Ministry and the military establishment – is of the view that technology transfers should be undertaken within minimal timeframes and with zero liability for Indian beyond a certain point in time: otherwise the purpose of making the Indian military (and internal security apparatus) self-sufficient in terms of manufacturing weapons and developing new security technologies would be defeated long before it could be even envisioned within reach.

Part of India’s military modernization is also aimed at making its “Cold Start” doctrine more effective: the creation and deployment of “Independent Battle Groups” or IBGs with both air and land elements in specified theaters of conflict against Pakistan and/or China (or both, with a “nuclear overhang”, as former Indian COAS Deepak Kapoor stated) would not be an effective military maneuver unless India is able to acquire and institutionalize modern weaponry, state-of-the-art technology and software, and most important, “Air-Land” warfare tactics and doctrinal methodologies into its armed forces. Though India’s existing conventional arsenal is suitable for a limited-scale war with Pakistan, it can by no means match the capability or strength of the Chinese military, whether deployed against it singularly or whether deployed against both China and Pakistan (and thus being spread precariously thin on its north and west). Modern weaponry from the West, including military technology transfer and incorporation of state-of-the-art weapons gadgetry and “add-ons”, will help India become a potent military power in the region: and the West, particularly the U.S., has a lot to gain by posturing India against China in the economic, diplomatic, political and military dimensions. However, India’s posturing and strategic reach in Asia – especially Central Asia – has been limited and effectively neutralized by China, while India is also not faring well in its “Look East” policy because of Chinese competitiveness and the lucrative offers that China makes to countries where India has tried to build inroads in recent years.

Even though India has become the world’s largest importer of military hardware – a sign of strength that India can afford the weapons it needs, which should be appreciated; as well as a sign of dependence and weakness of its indigenous defense market in today’s day and age – its objective of starting an arms race with either China or Pakistan (its two main regional adversaries) does not seem to be nearing fulfillment either. China already outclasses India in almost all spheres of military development, whether in place or expected to be in place by 2020, or even 2025. Pakistan has been engaged in an active counterinsurgency since 2007, and has not only developed modern small arms and battlespace weaponry to suit its conventional needs, but has also transformed its warfighting doctrine to make its military a cohesive and effective force which can deal with conventional as well as asymmetric threats simultaneously. The application of the “Azm-e-Nau” doctrine can be seen in the ongoing Operation Zarb-e-Azb in North Waziristan: the Pakistani military has successfully created an effective “Air-Land” synergy for the asymmetric battlefield, while maintaining conventional defensive formations at the borders and even in its cities. The arguments put forward by leading defense experts in recent times of Indo-Pak tensions have focused a lot on how the Pakistan Army has become “battle-hardened” by having been constantly deployed against an asymmetric enemy for almost a decade; the experience and battle-readiness of troops defines the opening stages of any conflict (especially between countries) and has a fundamental impact on the adversary’s tactics for achieving its primary and secondary military goals. The case of Hezbollah against Israel in the latter’s most recent incursion into Lebanon – in 2007 – showed how the guerilla force was able to effectively deter the Middle East’s “most powerful military organization” and denied them the means or the ability to achieve any of their significant objectives. At any scale of modern 21st century conflict, size matters as much as effectiveness, and size can be neutralized by effectiveness (of the opponent).

Through its ongoing bilateral relationship with India, China maintains its economic and military hegemony over India, and while India intends to match China by 2020, China itself is apparently aiming to match the U.S. (or even surpass it) by that time. The Chinese military has better relations with their Indian counterparts than the Pakistani military does, and the services chiefs of both countries reportedly meet each other on a periodical if not regular basis. While this procedure of continued communication has decreased the chances of conflict, the competing strategic designs of both these countries still make them adversaries rather than friends. A recent Chinese incursion on Indian territory (in early 2014) has shown that despite growing trade relations and the desire(s) of both governments to improve bilateral relations in all dimensions and directions, there is a fundamental disagreement between India and China on their common border. Policy suggestions at the highest levels of government were exchanged between the two countries to establish a border commission and resolve the disagreement on the international border between the two countries, but sustained progress in this aspect remains to be seen.

There are more recommendations for Pakistan, as opposed to China, when considering the intended as well as actual “modernization” of the Indian military, the Indian defense industry, and the design and methodology of “modernization” through which India is attempting to achieve a particular outcome by 2020. In this case, Pakistan has a unique, golden opportunity to strengthen its defense relationship with Russia: the gunship helicopters provided by Russia are playing an important role in the ongoing Operation Zarb-e-Azb. The provision of these weapons were not received happily by India, while this is seen as a move by Russia to express their concern as well as discontentment over India’s preference for Western weapons manufacturers rather than Russian ones. Pakistan and Russia can cooperate in other military fields as well: from systems purchases, to joint development, to even technology transfers. If Russia can construct a steel mill in Pakistan, can it construct a nuclear power plant (like Bushehr in Iran)? Can China help Pakistan actualize the goal of manufacturing a 1GW (giga-watt) nuclear power plant in the near future? Will Pakistan be able to effectively lobby the international community for these ventures, despite not having signed the NPT, so that it can tackle its ongoing energy crises? No matter what the answer is to these questions, Pakistan must increase the effectiveness of its indigenous weapons manufacturing capabilities, and ensure that its peacetime production levels remain consistent during wartime – though the fact remains that Pakistan has not experienced “peacetime” for the past decade or so. TTP militants have attempted to attack Pakistan’s ordnance manufacturing factories in Kamra and Wah on multiple occasions – though international media purported that militants were attempting to attack the installations because of the belief that Pakistan’s nuclear arsenals were stored there.

Like India, Pakistan must continue to define and then redefine its military needs – in terms of both human capacity and weapons technology capacity – and must set achievable targets to realize these goals in the short-term (within one year, i.e. by the end of 2014), medium-term (by 2015), and long-term (by 2020). As Pakistan deals with the internal threats to its security and stability – posed by the high-intensity TTP and the low-intensity Baluch insurgents – it must continue to play its role in securing and stabilizing the region (particularly Afghanistan) and must perform its responsibilities as a regional military power when it comes to bilateral relations with neighbours (and in the SCO organization, which Pakistan should endeavour to become a full-fledged member of). Finally, a strong and vibrant economy – which Pakistan can achieve if it focuses on transforming itself into a trading hub; and a trade route connecting different parts of the world to other parts where they wish to engage in economic activity – is a sure-shot guarantee of military security, since economic interdependence reduces the chances as well as opportunities of conflict (as well as of any localized conflict erupting into a large-scale international or multi-national conflict). Pakistan must concentrate on economic growth and human resource development, along with development of critical infrastructure – especially development of transport and communication infrastructure, including roads, rail transport, and air links – and of large customs houses and trading channels at the borders – such as modern, integrated border checkposts and state-of-the-art storage facilities to maintain goods traveling from one foreign country through another foreign country via Pakistan – so that Pakistan can become a two-way trading hub for intra-regional and inter-regional trade between three important parties: China and the Middle East and Africa, Central Asia and India and Asia Pacific, and other routes for countries to access China and India (as sources of goods and as sources of populations with wealth and purchasing power). This way, Pakistan will increase its importance for all these countries, as well as be the foundation of and critical pillar for the economic well-being of these regions: the countries and states in these regions will have a direct and positive stake in the maintenance and improvement of Pakistan’s security and stability. Therefore, Pakistan will become less and less dependent on India’s conventional and strategic military capabilities to ensure its own military survival and deterrence.