March 20, 2017
In matters of Defence, it sometimes pays to wait and take stock.
From the perspective of this year’s National Defence Day Celebrations and two years on from the decade-long frictions caused by the Defence Ministry’s attempts to commission a new generation of fighter aircraft, MMRCA (that’s Medium Multi Role Combat Aircraft to you and me), you might be forgiven for thinking that a person of even average courage and conviction would hesitate long and hard before commissioning another round of Defence Spending.
Prime Minister Modi certainly thought better of it back in 2015 when he dodged the bullet (in a manner of speaking) by ditching MMRCA altogether and instead of ordering thirty-six new Rafale Fighter Aircraft, off the shelf from the French company, Dassault. But the Dassault deal was a very long time coming, final contracts were only signed in September 2016 and whilst the new Fighters are undoubtedly an important part of Indian Air Defence capability, they still fall short of the deployed strength required by the Indian Air Force which requires between forty-two and forty squadrons by the late 2020’s, all of which makes an additional procurement round more or less inevitable.
But of course, a lot has happened in India since the Dassault Contracts in 2015. For a start, India is now the fifth largest economy in the World and the fastest growing large economy on the Planet. India also now has the Fifth Biggest Defence Budget in the World; bigger than
Russia (which it overtook this year) and it is projected to overtake the United Kingdom in 2018 with an eye-watering spend of $56.5 Billion. It is sitting at the top table now.
So why buy off the shelf again? Why not instead treat the current necessity of a fresh military procurement round as an opportunity to showcase the strengths of the Indian economy and its new, much improved technological base? In short, in this resurgent, burgeoning economy on the Subcontinent, isn’t it about time for MMRCA Reloaded?
And in a word, the answer from the Indian Government is “yes”.
Prime Minister Modi’s Cabinet announced late last year an enormous $25 Billion procurement round to acquire no less than 150 new generation fighter aircraft, and as part of the “Make in India” Initiative this new, single engine fighter will be built on the subcontinent, not bought off the shelf from abroad. And not only that, the Indian Navy also announced last month that it plans to acquire fifty-seven new carriers based aircraft and these too be built in India. How times have changed since 2015: Lockheed, Boeing and the Eurofighter Consortium are all queuing up to get involved in the project.
And it’s worth pausing for a moment to think about the wider implications of the initiative as well.
The Government launched the Make in India campaign back in September 2014, and at the same time Investment Regulations were relaxed so as to allow 49% Foreign Direct Investment (FDI) into the Defence Sector (previously there had been a cap on FDI of 26%); the timing of this move was no coincidence: it was all part of the government’s concerted policy of bringing down the level of military imports (contracts such as the Dessault Fighter). And the new policy had an almost immediate impact because between September 2014 and November 2015 the Indian Government received no less than $18 Billion worth of new proposals from foreign companies interested in manufacturing electronics in India. The Subcontinent became a global manufacturing hub and there was a marked step-change in its technological expertise on the ground demonstrated graphically, for example, by the fact that the number of smartphones made in and shipped across India had increased to 24.8% from 19.9% in the second quarter of 2015 alone.
This latest, round of Defence Spending, breathtaking in its size and scope should be considered in that context; without a radically improved, expert pool of technological talent on the subcontinent, it would simply be inconceivable that the Ministry of Defence could have committed itself to manufacturing the next generation of its strike aircraft in India; and without the Make in India Initiative and its fiscal relaxations on foreign direct investment, it would not be realistic to expect companies of the standing of Lockheed, Boeing and the Eurofighter Consortium to be lining up to take part in the program.
India has come a long way in two years. Sometimes it pays to wait.
Red Ribbon CEO, Suchit Punnose said:
I expect a lot of us, I watched the decade-long debate over the MMRCA Strike Fighter Project unwind into recrimination and an off the shelf deal for the French Rafael Strike Fighter in 2015; and as a lot of us have long suspected since then, the ongoing procurement requirements of the Indian Air Force and Navy have made it inevitable that a fresh approach to a further procurement program would become inevitable once this sense if expedient decision had been taken by Prime Minister Modi two years ago.
Well, the time for that fresh approach is now; and for India, it couldn’t come at a better time, with its resurgent economy firing on all four cylinders. The whole procurement exercise has proved to be an object lesson in how the Country has moved forward so quickly from once buying off the shelf overseas, now to manufacturing essential Defence hardware for itself as part of the “Make in India” Initiative, relying on a technology base and a level of home grown expertise on the Subcontinent that has made India a World Class Manufacturing Hub in the intervening years.
So it seems especially appropriate that we should be able to celebrate that success now; on National Defence Day.