India is number one on the list of nations to which United States and European companies would like to make a major defense export sale. This interest peaked in the first decade of the 2000s, with the Indian Air Force’s (IAF) Medium-Multirole Fighter Aircraft Program (M-MRCA) procurement.
The tender involved almost every potential US, European, and Russian contender. For the winner, the payoff was the proverbial pot of gold at the end of the rainbow. The IAF was planning to purchase 126 fighter aircraft plus 63 future production options from the winner of the tender.
That would have been the largest fighter aircraft sale since the 1980s. Thus, the world’s aerospace companies vied to enter the Indian market.
The original Indian requirement was that 18 aircraft from the winning bid would be purchased off-the-shelf, and the other 108 would be license-manufactured in India. However, after years (2007-2012) of flight trials and technical evaluations, due to the complexities and financial risks of the Indian demands for offset and local industrial participation, a contract with India never materialized.
Instead, in 2015, India decided to purchase 36 aircraft from the winner of the competition, the French-made Dassault Rafale, directly from the production line in Bordeaux. The agreement for a licensed production line was never signed, and those 36 aircraft remain the only fighters to be procured under this program.
The general consensus today is that the IAF made a mistake by not agreeing to terms with Dassault in establishing aircraft production in India. It was a missed window of opportunity.
“It was a blunder not going for it. It would have brought world-class manufacturing facilities to India and skill development. The French were backpaddling on the transfer of technology that HAL could not meet their standards. It was a delaying strategy, and India should have dealt with it firmly,” said IAF Air Marshal Matheswaran in January of this year.
India’s Russian Military Linkages
Speaking with a long-time Indian defense analyst, he and others tell 19FortyFive that the IAF and the other armed services branches now find themselves in a three-way quandary.
-The M-MRCA aimed to diversify India’s defense supplier base. However, the country remains deeply dependent on Russia as its leading arms supplier. New Delhi remains wedded to Moscow without any new partnerships involving Western suppliers.
-Russia sanctions and the pressures of the Ukraine war make it very difficult for Russian firms to continue to support the weapons sold to India in the previous decades. Cooperation with Russia is already starting to impact Indian firms, and the threat of sanctions is beginning to restrict India’s long-running defense industrial partnership with Moscow. India is currently in the crosshairs of Western sanctions enforcement institutions for acting as a conduit for illegal shipments from the West to Russia.
-Western firms are beginning to pull out of the Indian market. After nearly 20 years of being unable to make a major sale, India now wants to move closer to the West, which may be too little too late. “India fatigue has set in,” said one recently retired European defense company executive.
In the meantime, the Russian Sukhoi Su-30MKI remains the IAF’s workhorse fighter, with the force having almost no options to replace this type. Instead, New Delhi is considering an upgrade of the aircraft, which only solidifies the relationship with the Russians.
Moving To Exports
India’s MoD bureaucracy has been fixated for too long on buying fighter aircraft from Sukhoi and relying on those aircraft and other Russian platforms to fend off neighboring threats, China and Pakistan, both of which have nuclear arsenals. There is also almost no “muscle memory” in the Indian MoD geared towards making major procurements from Western nations.
The one exception at present might be the Indian decision to procure the carrier-capable Rafale M to replace its MIG-29K fighters. The Russian aircraft had proven to be very unreliable and—in the words of the same—” breaks every time it lands.” With no other choices available, India was forced to make a directed procurement.
But rather than just purchasing weapons from the West, Prime Minister Narendra Modi now wants to transform India from the world’s largest importer of homemade weapons to a major exporter. Therefore, he plans to expand the state-owned Export-Import Bank (EXIM)’s ability to offer long-term, low-cost loans to clients to facilitate those sales.
Reuters reports say that this client list would include nations whose political or credit risk profiles may limit their access to conventional financing. Two Indian officials and three industry sources who spoke to the news service confirmed this.
New Delhi will also increase the number of defense attachés deployed in its foreign missions as part of a new government initiative. Their job will be to directly engage the state to negotiate export arms deals for weapons made in India, according to four Indian officials who also spoke to Reuters.
India is supposedly targeting nations that have in the past relied on Russia for arms as potential buyers. Those countries are believed to be regional neighbors like Malaysia, Vietnam, and other buyers of Russian weapons like Algeria. While India has had a small-arms production sector for many years, its non-state-run firms have only recently begun to produce higher-end munitions and equipment.
In the end, Russia may find that the once-lucrative Indian market will be lost to them as another consequence of the invasion of Ukraine.
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About the Author: Reuben F. Johnson
Reuben F. Johnson is a survivor of the February 2022 Russian invasion of Ukraine and is an Expert on Foreign Military Affairs with the Fundacja im. Kazimierza Pułaskiego in Warsaw. He has been a consultant to the Pentagon, several NATO governments and the Australian government in the fields of defense technology and weapon systems design. Over the past 30 years he has resided in and reported from Russia, Ukraine, Poland, Brazil, the People’s Republic of China and Australia.