The three-day visit of the Indian Defence Minister, Rajnath Singh, to Washington on August 23-25, has kindled renewed hope for the nascent private sector in the armament industry.
During the nineties, the then Prime Minister, P.V. Narasimha Rao, had dared to open the capital goods sector and the services sector for the private sector. Similarly, after becoming the prime minister in 2014, Narendra Modi took a calculated risk by allowing the Indian private sector to venture in the defense production sector, still considered a holy cow.
Indeed, it was a calculated risk triggering paradigm changes in the country’s defense procurement sector. Like the country’s public sector, it had been one of the most lucrative sectors for augmenting political as well as personal wealth for the country’s chosen politicians, defense and civilian officials engaged in procuring defense supplies.
During the past 10 years, India’s private sector companies aspiring to become manufacturers and exporters in the lucrative armaments markets on a global scale have already achieved substantial experience. It is quite known that despite aggressive media rhetoric, the Indian defense sector has been languishing due to substandard technologies and the political apathy. For the politicians irrespective of their much-pronounced different ideologies, importing the state -of-the art weapons or fighter planes rather than developing even the engines for its planes was much more lucrative than allocating adequate budget for research and development without any substantial kick offs. The successive governments never shared the details of the plight of scientists and their exodus to various destinations across the continents, including China.
Therefore, it is a matter of little surprise that the country could not develop aircraft engines. Instead of taking corrective steps, a number of senior Indian Air Force officers have been engaged to justify the import of engines for the much-awaited Indian fighter plane, Tejas. Meanwhile, during the past four decades, the Chinese companies have already show-cased their high-tech weapons and aircrafts for the world markets.
A Bold Step- During his visit, Singh has supervised signing of the two historical pacts facilitating the availability of technologies to the Indian companies, and the appointment of liaison officers on reciprocal basis for sharing the experience and effectiveness of the new weapons being developed and marketed by the US and India.
It is hoped that the Modi government’s decisive policy initiatives in this key sector may finally enable the Indian industries to access and assimilate new technologies for manufacturing new hi-tech weapons for the world markets.
Earlier, only the public sector such as Hindustan Aeronautics Limited (HAL) and the Defense Research and Development Organization (DRDO
were engaged in the production and research. In spite of the Russian cooperation, the defense sector too suffered like most of the public sector industries.
With the entry of some of the top Indian companies, the Tata Advance System, Mahindra and Mahindra, Larsen and Toubro and many other private ventures is expected to revolutionize the country’s present primitive armament industry to become a hub for exporting the state-of -the art weapons and ammunition to be exported to other countries. The Indian corporations such as Tata or Mahindra and Mahindra are already global brands. However, the entry of Anil Ambani known for causing financial disaster to many companies in the Ambani empire, now in the defense sector is quite intriguing. He is being allowed to collaborate with the French company manufacturing Rafael fighters for assembling and servicing in India.
The Indian Government has rejected the allegation that the government had suggested the name of Anil as an Indian partner. It is being claimed that his name was suggested by the French company. Since Anil has hardly any experience in this field, it is difficult to accept the Indian government’s claim. It is believed that the truth will be known only after the change in regime in France. Anil, it is being stated despite being known as a thoroughly incompetent business man, might either have a godfather in the ruling BJP or have been supported by his elder brother, Mukesh.
Investments Opportunities – The recent agreements signed in Washington are expected to lure a large number of
investors in India’s defense production companies; thus boosting their market share like their peers in the US and Europe. The Indian corporate are hopeful that they too would be earning huge profits like the American armament industries. It has flourished in recent years, especially after the Russian invasion of Ukraine on February 24 , 2022, and the ongoing conflict between Israel and Hamas, a terrorist outfit of the Palestinians in West Asia.
America’s major defense manufacturing companies such as RTX, earlier known as Raytheon, Northrop Grilumman’s Corporation and Lockheed Martin have registered huge profits during the past three years. The prices of their shares have increased by more than 40 percent. In 2024, 900 billion USD is being allocated in the American defense budget, which is expected to boost the prospects of more profits this year.
It is stated that the emoluments of the CEOs of the weapon manufacturers is 100 times more than even the Secretary of Defense in America
Expansion of the Collaboration –During this high-power visit, the agreements signed between the officials of the Pentagon and the Defense Ministry of India, include the SOSA or the Security of Supply Arrangement. The crucial pacts were
signed before Rajnath Singh and his American counterpart, LIoyed Austin.
The initiative is considered as a milestone in the growing US-India defense ties
India, thus, has become the 18th. country to join the exclusive club of the SOSA countries, including the UK, Japan and Australia.
Liaison Officers – The two sides have also agreed to appoint liaison officers for better coordination in different commands. The details are yet to be shared about this proposal. It is believed that in the coming years, India and the US are going to have close coordination in the Indo-Pacific region. The two countries are worried that the aggressive Chinese policy in the region might lead to a war-like situation in the region.
In spite of the ongoing efforts for an immediate ceasefire in the Ukraine -Russia War and in the West Asian conflict, peace continues to be elusive.
Amidst the apprehensions of the further expansion of the conflicts in the two sensitive regions, Eastern Europe, and West Asia, the visit of India’s defense minister, Rajnath Singh, to Washington for further deepening defense ties between the US and India is considered significant for their defense cooperation. The two countries have decided to cooperate in defense research and even in marketing new generation weapons produced jointly.
Political Support –It is estimated that one third members of the American Congress have shares in the defense companies. Also, according to some studies, the US lawmakers are being benefited by the defense industries. They liberally fund the election campaigns.
According to some knowledgeable sources, the defense contractors get 50 percent of the funds sanctioned by the Congress. It is believed that some of the beneficiaries of the defense deals are not investing in Dubai. They find that the tax laws are quite liberal and the country enjoys political stability. In the real estate market one may buy a luxury villa without any hassle, as 70 percent of the payment is done in cash.
In spite of the unbridled corruption in the defense deals in Washington, there are voices in the political circles that a system should be adopted to curb the rampant corruption.
Gopal Misra has been associated with national and international media. His books on journalism and geo-politics have been well-appreciated. Views are personal.
