Russian Defense Contractors See New Prospects On Indian Market
(Source: TASS Defense; published June 29, 2016)
MOSCOW --- The Indian government’s protectionist policy known as Make in India offers new prospects to Russian arms suppliers on India’s market, according to the Gazeta.ru online news agency.

Indian authorities have ordered the Indian-operated S-125 Pechora (NATO reporting name: SA-3 Goa) surface-to-air missile systems repaired by Indian military factories only as part of the Make in India protectionist program designed to develop national industry and woo more investments.

In May, the Indian Air Force (IAF) operating the SAM systems issued tenders to a number of Indian defense contractors for fitting the Pechora’s subsystems with digital technologies to the tune of $272 million.

However, according to the Defense News weekly, the Indian defense industry is not advanced enough to conduct the upgrade. According to an IAF officer, Indian plants are establishing technical partnership with foreign colleagues to fulfil the order.

Early in 2015, news came that India and Israel had agreed to co-produce missiles for the air defense system intended to replace the S-125 in IAF’s inventory. However, according to Indian Air Marshal Arjan Singh, the production of the advanced AD system has been put off for a number of reasons and New Delhi has decided not to write off the Russian-made materiel, but upgrade it to new standards instead.

The Pechora’s upgrade program provides for the modernization of its SAM’s radar homing head and the system’s integration with the IAACCS system exercising automatic control of IAF’s operations. This will extend the Pechora’s service life by 10 years.

The upgrade stipulates the digitizing of some of the SAM system’s components. There are plans for boosting the capabilities of the target and missile tracking, antenna position control and automatic launch subsystems among other things. The winner in the tender will have to supply IAF with 16 S-125s within 42 months after the order is awarded.

This will not be the first time Russian manufacturers may be offered a contract for technologies designed for updating Russian-made Indian-operated combat gear. For instance, MiG Corp. in 2015 furnished India with over 10 upgrade kits as part of the modernization of IAF’s MiG-29 (Fulcrum) fighters.

Soon after Indian Prime Minister Narendra Modi assumed office, he initiated the Make in India program aimed at having both Indian and foreign companies operating in India ratchet up their output. The initiative, inter alia, aims to make India a world leader in terms of direct foreign investment.

Defense industry is among the 25 branches of economy, prioritized by the Make in India program. However, New Delhi has placed a cap on the volume of foreign investment in its defense industry at 49%. The similar caps have been applied to the aerospace industry and mass media, while foreigners may own the rest of firms completely.

The Defense Procurement Procedure published in March 2016 stemmed logically from the Make in India initiative. It is designed to enable the Indian private sector to have a higher profile in the production of military equipment.

Expert Timofei Borisov stresses that the Indian arms market is among the most accessible and competitive ones in the world. Certainly, the country pursues an independent military-technical policy. The arms supplier diversification policy consistently pursued by the Indian government since the country gained sovereignty is a way to ensure independence in this sphere.

Even during the Cold War, the Indian military did its best to strike the balance between the Western and Eastern blocs as far as arms acquisition is concerned. This has been in pursuance of the policy of Indian Premier Jawaharlal Nehru, a co-founder of the Non-Alignment Movement. While New Delhi bought weapons mostly from Great Britain and France early into its independence, the Soviet Union had been the most active player - albeit not the only one - on the Indian arms market from the mid-1960s to the mid-‘80s.

Although Russian official arms exporter Rosoboronexport highlights the remarkable scale of the military cooperation between the two countries, there is no obvious leader on the Indian arms market now. India still do not fit the bed of Procrustes of most of the countries buying the bulk of their weapons from either Russia or the United States and its NATO allies.

At the same time, India’s defense industry has yet been unable to make it on the list of the world’s top defense contractors and, according to expert opinion, will remain unable to do so for a long time. Probably, India will not put up considerable competition to Russia, or China, or the West, limiting itself to the delivery of a small number of weapon systems to developing countries, those in South-East Asia in the first place. According to SIPRI, the customers for India’s weaponry include Afghanistan, the Maldives, Myanmar, Nepal, the Seychelles, Sri Lanka and Surinam.

India supplies them with modest batches of ammunition, small arms, light helicopters and various components. It has plans to export the Arjun main battle tank, but the prospects of the export are hazy for now. The materiel the Indians can start exporting also includes the Tejas light fighter jet that IAF and the Indian Navy have started introducing to their inventories. However, the above materiel will not replace the foreign - mostly Russian-made - warplanes in the inventories of both India and its foreign partners.

Ironically, the latest protectionist steps by Indian authorities have improved the prospects for Russian suppliers, rather than hindered them. In the evolving situation, Russia is gaining a competitive edge owing to its willingness to issue production licenses and implement joint programs. Other countries have been far less flexible in this respect so far.

In addition, India is still keen on the Russian materiel Russia has ceased to operate as obsolescent, including the S-125 Pechora SAM system the Indian intend to upgrade. Russia has decommissioned the type as far back as the 1990s, according to the Gazeta.ru news portal. -

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