Comprehensive policy needed to compete with exporters from China, Israel etc
Prasun K. Sengupta
Despite setting a target of exporting military hardware worth Rs 35,000 crore by 2025, India continues to and will continue to face an uphill battle in realising such lofty ambitions.
The value of export by public and private sectors, authorised by the ministry of defence’s (MoD) department of defence production (DDP), increased from Rs 1,940.64 crore in 2014-15 to Rs 8,4,34.84 crore in 2020-21. It hit a record high of Rs 10,745.77 crore in 2020-21, but plummeted thrice during this period in 2016-17, 2019-20 and again in -21. India’s defence exports for 2021-22 were estimated at Rs 13,000 crore, the highest ever, according to Sanjay Jaju, additional secretary (defence production) in the MoD.
The US was a major buyer as also nations in Southeast Asia, West Asia and Africa. “The private sector accounted for 70 per cent of the exports, while public sector firms accounted for the rest,” Jaju said. Earlier, the private sector used to account for 90 per cent but now the share of defence public sector undertakings (DPSU) had gone up, he added. While India’s defence imports from the US have gone up significantly in recent years, Indian companies have been increasingly becoming part of the supply chains of US defence companies like Boeing and Lockheed Martin.
The bulk of the exports, achieved by the private sector over the past 12 years, are in fact the end-products of industrial sub-contracts secured from US-based original equipment manufacturers (OEM). These include the joint venture established in 2009 between the Hyderabad-based Tata Advanced Systems Ltd (TASL) and Sikorsky Aircraft Corp (now a subsidiary of Lockheed Martin) for producing cabins of the S-92 helicopter; the Tata Boeing Aerospace Ltd joint venture since June 2018 that has been producing AH-64 Apache combat helicopter fuselages; the Tata Lockheed Martin Aerostructures Ltd (TLMAL), a joint venture between TASL and Lockheed Martin that was created in 2010 and which currently produces 24 C-130 empennage (horizontal and vertical stabilisers along with leading edges and tip assemblies) assemblies annually along with centre-wing box components for the C-130J Hercules transport aircraft; and Bengaluru-based Dynamatic Technologies Ltd, which manufactures aft pylon assemblies and cargo ramp assemblies for the Boeing CH-47F Chinook helicopter, plus power and mission cabinets for all Boeing-built P-8 LRMR/ ASW aircraft.
Hardware Exports
Major military hardware exports from India in the past had included weapons simulators, tear-gas cannister launchers, torpedoes and their loading/launching mechanisms, alarm monitoring and control systems, monocular night-vision devices and binoculars, sonar suites for warships, wheeled armoured protection vehicles, weapons locating radars, HF radios, and coastal surveillance systems. The bulk of such hardware—sourced mostly from the MoD-owned DPSUs—was exported to Nepal and Bhutan. Myanmar was the beneficiary of 52 per cent of India’s total exports of military hardware, Sri Lanka (24 per cent) and Mauritius (13 per cent). Last January, India signed a USD 374.96 million contract with The Philippines–the single biggest defence export order to date, for the supply of three batteries of shore-based anti-ship variant of the BrahMos-1 supersonic cruise missile.
The bulk of such exports was made possible due to the government of India extending either grants-in-aid or lines of credit to the recipient countries. Thus, the Kolkata-based Garden Reach Shipbuilders & Engineers Ltd (GRSE) became the first shipyard of India to have exported a warship when it delivered a 1,350-tonne Multi Role Offshore Patrol Vessel to Mauritius, the CGS Barracuda, in December 2014 at a cost of USD 58.50 million.
Similarly, the Goa Shipyard Ltd (GSL) delivered to the Sri Lanka Navy an advanced offshore patrol vessel (AOPV) on July 22, 2017, 86 days ahead of schedule, with the second AOPV following 25 days ahead of schedule on March 23, 2018. The GSL has also delivered battle damage control simulators to the Myanmar Navy. This was followed by the delivery of two fast patrol vessels (FPV) and 11 fast intervention craft (FIC) to Mauritius. On February 4, 2021, the GRSE announced a contract for delivering a single FPV to Seychelles. India had previously donated a number of vessels and aircraft to Seychelles. The 46 metre SDB Mk 5 patrol boat PS Constant (formerly INS Tarasa) was handed over in November 2014, while the PS Topaz (formerly INS Tarmugli) was donated by India in 2005. The latter has since been renamed as the PS Zoroaster. In 2016 India delivered the 27.5-metre patrol boat Hermes to Seychelles for coastal surveillance, anti-poaching, anti-smuggling and search-and-rescue activities.
In June 2005, the Indian Navy gave 150 tonnes of warship components and other accessories worth USD 10 million to the Vietnam People’s Navy. In September 2014, India extended a USD 100 million defence line of credit to Vietnam because of which in September the same year, Larsen & Toubro (L&T) signed the principal contract with the Vietnam Border Guard valued at USD 99.7 million for design and construction of high-speed patrol vessels in India as well as for transfer of design and production technology, along with the supply of equipment and material kits for construction of seven follow-on vessels at a Vietnam-based shipyard.
Constructed from aluminium alloy, each of the vessels are about 35 metres long and can clock a speed of 35 knots with a state-of-the-art navigation and surveillance equipment and self-defence capabilities on board. The design and engineering of these vessels were undertaken at L&T’s dedicated Warship Design Centre, with the vessels being built at the company’s Kattupalli Shipyard, off Chennai. The first of five such boats was delivered by L&T in September 2020.
Asian Market
India began supplying major military hardware to Myanmar starting 2013 when the MoD-owned DPSU Bharat Electronics Ltd (BEL) began supplying licence-built RAWL-02 MK IIAP/N-112110340676 airspace surveillance radars (whose OEM is THALES Nederland), HUMSA-NG sonar suites and ALWT warship-launched lightweight torpedoes built by DPSU Bharat Dynamics Ltd (BDL) for the Myanmar Navy’s six Aung Zeya-class guided-missile frigates.
Half of India’s arms exports during the 2017-21 period went to Myanmar. The BEL also exported electro-optic systems, radar video extractor receivers, VHF communications systems, graphics processors, workstation hardware, server storage, and batteries to Myanmar. This placed India as the third largest arms supplier to Myanmar for the five years, accounting for 17 per cent of its imports, after China (36 per cent) and Russia (27 per cent) along with Serbia and North Korea. Sri Lanka and Armenia (that ordered four Swathi weapon locating radars from the BEL) accounted for 25 per cent and 11 per cent of India’s arms exports during the half decade 2017-21.
India’s latest target for exporting military hardware is Bangladesh. Marking some progress on the delayed implementation of a USD 500 million military line of credit extended by India back in 2018, Dhaka recently shared a wish-list of military platforms and systems that its armed forces would like to procure from India. This includes a diverse range of equipment, including a floating dock, and logistics ship and oil tanker for the Bangladesh Navy, among others.
Bangladesh is modernising its armed forces, inducting new weapons and improving infrastructure in line with its ‘Forces Goal 2030.’ The Indian line of credit is for utilisation by April 2029. Though progress has been slow, many types of equipment are under various stages of consideration. The Bangladesh Army has approved the procurement of three items, so far—five BLT-72 bridge-layer tanks at a cost of approximately USD 10 million, seven portable steel bridges (Bailey) at a cost of around USD 2.2 million and 11 wheeled mine-protected vehicles from the Tata Group at an approximate cost of USD 2.2 million.
Other items proposed to be procured by the Bangladesh Army are Mahindra XUV-500 off-road vehicles, door hard-top vehicles from Mahindra at an approximate cost of USD 2.35 million, heavy recovery vehicles, armoured engineer reconnaissance vehicles and bullet-proof helmets. Other proposals include the modernisation and extension of an existing automobile assembling unit for a Bangladesh machine-tools factory, which is a proposal from Shapoorji Pallonji Co Pvt Ltd, two types of explosives at a cost of over Rs 4 crore, 21 types of raw materials at a cost of around Rs 3 crore and 10 types of tools at a cost of Rs 6.6 crore.
India is keen to offer field artillery howitzers, mortars, multi-barrel rocket launchers and anti-armour missiles, support vehicles, electronic and engineering equipment, coastal surveillance and riverine vessel traffic monitoring radars, helicopters, military rakes and shipbuilding services. In addition, Bangladesh has been offered India’s expertise in sea, riverine and airport infrastructure development. Last August, the two countries held the 4th India-Bangladesh annual defence dialogue and tri-service staff talks during which the implementation of the line of credit was reviewed by both sides and there was also significant focus on military-industrial cooperation and capability-building. In May 2018, the GRSE had signed a memorandum of understanding with Bangladesh’s Khulna Shipyard Ltd to provide assistance and know-how in the design and construction of warships like the indigenously designed and developed anti-submarine warfare shallow-water craft (ASW-SWC). Presently, Bangladesh’s biggest supplier of military hardware is China, followed by Italy.
Future Challenges
There are several challenges for Indian OEMs to emerge as major exporters of military hardware in future, despite India of late significantly expanding her military diplomacy and assistance for capacity building and capability development for countries in the Indian Ocean Region. Take for instance, the efforts to sell 18 Tejas Mk.1 tandem-seaters to fulfil the Royal Malaysian Air Force’s fighter lead-in trainer (FLIT) requirement.
The Hindustan Aeronautics Ltd (HAL) began marketing both the Tejas Mk.1 light multi-role combat aircraft (L-MRCA) and its Mk.1A variant even before its fundamental operating and performance parameters could be established. Back in 2019, the Tejas Mk.1s from the Indian Air Force’s Sulur-based No.45 (Flying Daggers) squadron were flown to the Langkawi International Maritime and Aerospace Exhibition (LIMA), between March 26 and 30 when the Mk.1A airframe’s total technical service-life (TTSL) had yet to be calculated, for which an in-service Tejas Mk.1 is now being subjected to fatigue tests after logging in almost 2,700 flight-hours since 2011. That is because the IAF has specified that the TTSL be extended from the present estimated 3,000 hours to 6,000 hours. Furthermore, as for export prospects of the Mk.1/Mk.1A variants go, no marketing effort will be successful until the following mandatory questions from any prospective customer are answered by HAL:
- a) What’s the TTSL of Tejas’ airframe?
- b) What’s the direct operating cost per flying hour of Tejas?
- c) What’s the no of maintenance man-hours per flying hour of Tejas?
- d) What’s the turnaround time for re-arming and refuelling the Tejas?
So far, not even estimated figures for all of the above are forthcoming from HAL. Despite this, HAL submitted a sales-and-purchase proposal to Malaysia’s ministry of defence (MINDEF) in October 2021 for supply of 18 Tejas Mk.1 tandem-seaters. This was followed by HAL signing an MoU on August 17 this year for establishing a regional marketing office in Kuala Lumpur, Malaysia. Defence secretary Ajay Kumar and additional secretary (defence production) Sanjay Jaju were present during the signing ceremony with Malaysian company Forte Drus, which represents HAL (i.e. marketing agent) in Malaysia and has also been designated as the agent for promoting HAL’s range of products and services in the entire Southeast Asian region.
This in turn throws up four questions: 1) Has anyone realised that Malaysia will never buy any military hardware with Israel-origin sub-systems and guided-weapons on-board (like the Tejas Mk.1/Mk.1A do)? 2) How will India reconcile its declared policy of not having any dealings with financial middlemen, i.e., agents and will such a policy be adopted even when exporting military hardware? 3) Will India instead adopt a hypocritic posture? 4) Will Malaysia’s regional neighbours in Southeast accept HAL’s policy of having its regional marketing HQ in Malaysia, and not in Singapore? It is perhaps for these reasons that the tandem-seater FA-50—co-developed by Korea Aerospace Industries and Lockheed Martin—has emerged as the frontrunner for winning the Malaysian FLIT contract. The FA-50 has already been procured by the air forces of Indonesia, Iraq, the Philippines, Thailand, Colombia and Poland.
Export Policy
India also faces significant challenges in formulating an all-encompassing export policy for military hardware, especially when competing against cheaper and more aggressive OEMs from China, Israel, Poland and Serbia. Will the Kalyani Group’s advanced weapons like the ULH 155/39 towed howitzer and Garuda 105mm/37-cal mounted gun system be exportable to conflict zones in Africa and West Asia, where such weapons are in high demand and end-user certificates are unlikely to be submitted by the buyers? Will the Kalyani Rafael Advanced Systems Pvt Ltd (KRAS) joint venture (operational since 2020 and presently manufacturing 1,000 Barak-8 surface-to-air missile (SAM) kits for final integration and supply by BDL to the Indian Army and the IAF over the coming years) be authorised to supply Barak-8 SAMs to countries such as Myanmar and Vietnam?
When compared to the non-cannisterised Akash-1 SAM that was developed by the MoD-owned Defence R&D Organisation (DRDO), the Barak-8 possesses a far-longer and cheaper service-life. This is because the existing Akash-1 and Akash-1S SAMs have to be stored separately in pressurised missile-containers and consequently have to be loaded and unloaded before and after use. This in turn has reduced the service-life of the Akash-1 and Akash-1S missiles.
While the 28km-range Akash-1 and Akash-1S missiles being stored in pressurised containers is acceptable to the Indian Army (since the Army-specific Akash-1/Akash-1S E-SHORADS are deployed only during exercises or wartime), the IAF prefers to have cannister-encased missiles in ready-to-fire configuration (like the Barak-8 MR-SAM and Barak-8ER LR-SAM), since the IAF’s Akash-NG Squadrons are required to provide 24/7 and year-round air-defence coverage and hence the usage of fully exposed Akash-1/Akash-1S missiles becomes maintenance-heavy and costly to maintain in serviceable condition. Small wonder then that Vietnam has decided against procuring Akash-1 SAMs (despite India extending a USD 500 line of credit to Hanoi in September 2016) and is now negotiating the purchase of Barak-8s from RAFAEL.