India is preparing a revolution in the arms market

(RIA Novosti correspondent in India Yevgeny Bezeka) - All participants in the DEFEXPO-2008 that opens in Delhi on February 16 are bound to see the beginnings of a revolution in the Indian military-industrial complex. This revolution is bound to acquire global dimensions because India is in the top ten in spending on arms - in 2007-2012 it will buy $30 billion worth of weapons.

The revolution is rooted in India's reluctance to depend on foreign weapons. It wants not only to be militarily sufficient but also to become a world center for the production and exports of arms spare parts.

Indian private companies that have not been prominent in the defense industry will play a key role in pursuing this goal. Only recently, they were not awarded any government defense orders, but now they will be encouraged to make friends with foreign partners in order to carry them out.

The new line is reflected in the DEFEXPO's official goal - to become a site for contacts of foreign producers with Indian industrialists with a view to setting up joint ventures.

Indian private companies have become much stronger in the last 17 years since the Indian market was opened to foreigners. They are irritated that a lion's share of government orders is awarded to foreigners and state-run companies.

The Indian defense industry does not always cope with its goals. Therefore, the government has promised to give a bigger share of multi-billion defense orders to domestic private companies.

The latter's advent to the strategic defense industry that accounts for about 2.5% of the GDP should resolve two tasks - encourage competition with state-owned companies and increase its adoption capacity - new orders of foreign weapons will bring in huge investment.

The Indian government has required that foreign companies should invest no less than 30% of the contract's value into the local defense industry. This applies to all deals worth more than three billion rupees (about $770 million). This figure has been raised to 50% on the eve of a mega tender for the supply of the Indian air force with 126 fighters to the tune of more than $10 billion.

One third from $30 billion is $10 billion. This is the amount of investment that India will have to digest in the next few years. Indian defense ministry officials admit that state-owned companies will not be able to swallow that much.

For the time being, private companies are kept at a certain distance - they do not have a chance to receive a defense order if the share of foreign capital exceeds 26%. Moreover, unlike state-owned companies, they have pay 30% import duties for foreign spare parts.

But this situation may change any time. First, analysts expect an increase in the 26% limit on foreign capital. In other words, investors or arms suppliers will set up in India a joint venture that will carry out the orders they have received - but on the spot rather than abroad.

Second, the government is about to complete a list of private companies that will receive equal rights with state-run firms. It is rumored that the list will include such industrial giants as Larsen& Toubro, and companies belonging to Godrej, Tata, and Mahindra& Mahindra.

However, Defense Secretary Shri Pradeep Kumar admitted last week that approval of this list was being delayed because of resistance on behalf of some state-owned companies.

But the government has already promised help to foreign firms that are rushing around with bags of money in the search of local partners. There is no doubt that they will implement the new requirements and receive licenses.

Some private companies have been working for the defense industry. Larsen& Tourbo, for one, is building a secret nuclear-powered submarine for India, and is prepared to assemble aircraft under license that is, to do what the state-owned Hindustan Aeronautics Limited (HAL) is now doing.

Larsen& Toubro and Strategic Electronics Division from the Tata Power Corporation are carrying out a defense ministry order for the production multiple launch rocket systems. The tractor-building company Mahindra& Mahindra has built an armored cross-country vehicle in just two years.

The Defense Research & Development Organization (DRDO) is going to acquire a new role of a scientific center. It will also be the main distributor of orders to private companies.

To sum up, those companies that want to sell arms to India should take into account its new requirements. The forthcoming revolutionary changes will call for a new approach and more flexibility. Indian partners in the arms market should learn how to come to terms with the local players, develop production lines, find the best ways of implementing offset commitments, and respect the higher ambitions of their Indian partners.

Russia that has an impressive display at the shows enjoys obvious advantages in this respect because India has been testing its new policy primarily in cooperation with Moscow. But this alone does not guarantee Russia's victories at all tenders for defense orders.

The opinions expressed in this article are the author's and do not necessarily represent those of Trend.

Subscribe to Trend in Google News! Subscribe
Iran, Russia to increase maritime transit
Iran, Russia to increase maritime transit
Iran looking for preferential tariffs in trade with Brazil
Iran looking for preferential tariffs in trade with Brazil
Iran eyes to complete energy project in East Azerbaijan province within 3 years
Iran eyes to complete energy project in East Azerbaijan province within 3 years
Loading Bars
Iran, Russia to increase maritime transit
Iran looking for preferential tariffs in trade with Brazil
Iran eyes to complete energy project in East Azerbaijan province within 3 years
Turkmenistan eyes to utilize full potential in transport and logistics sector
National Iranian Drilling Company declares number of oil-gas wells drilled in country
Azerbaijan reveals time of completing Khudaferin, Giz Galasi HPPs
IsDB Institute releases pioneering E-Book reader app (PHOTO)
Turkey shares data on export of cement and glass ceramics to Azerbaijan
Indians placed record bets on US stocks in 2021
Azerbaijani Health Insurance Agency open tender to buy ICT equipment
Uzbekistan to complete construction of several large complexes in 2023
Iran to facilitate carpet export via Ardabil province
Iranian currency rates for January 24
Armenian media names probable candidates for presidency
Turkey records increase in number of real estates purchased by Iranian citizens
Azerbaijani currency rates for January 24
Turkish export of cars to Azerbaijan up in 2021
Azerbaijan names amount of payments for risky operations to budget in 2021
Azerbaijan develops modular project for border risk management system
Launch of bus routes to Azerbaijan's liberated lands to play crucial role in integration of these territories - official
Turkey registers rise in number of companies with Azerbaijani capital for 2021
Kazakhstan’s Atyrau Refinery opens tender to buy welding electrodes
Georgia’s oil imports from Turkmenistan almost triple
Iran sees continuous increase in gas consumption
Iran reveals estimates on value of non-oil exports
Iran records decrease in water reserves of dams
Oil prices rise on supply fears amid tensions in Eastern Europe, Middle East
Iran provides loans for Persian shallot cultivation
Singapore core inflation rises at fastest pace in nearly 8 years
TRACECA eyes launching new pilot project within Europe-Caucasus-Asia corridor (Exclusive) (PHOTO/VIDEO)
Cargo transportation through Iran's Shiraz International Airport up
Iran shares data on monthly sales of goods at Mercantile Exchange
Iran's Persian Gulf Bid Boland Gas Refining Company boosts natural gas refining
Weekly review of Azerbaijani currency market
Firefighters gaining control of wildfire that closed scenic California highway
2021 was successful year in Azerbaijan in terms of strengthening social protection of citizens
UAE, Saudi Arabia thwart separate Houthi attacks
First bus of Baku-Shusha-Baku route departs (PHOTO)
Truckers fighting government vaccine mandate march to Canadian capital
Coronavirus cases remain high as minister renews warning about Istanbul
Biden Weighs Deploying Thousands of Troops to Eastern Europe and Baltics
French adventurer Jean-Jacques Savin dies attempting to row solo across the Atlantic
Taiwan reports new large-scale Chinese air force incursion
Two Pakistani fisherman drown, 10 missing after boats sink
Clashes in Brussels as thousands protest at COVID health pass and restrictions
Azerbaijan State Customs Committee records rise in number of risk profiles in CNFEA
Azerbaijan launches regular bus routes to liberated territories
Georgia’s imports of copper ores from Azerbaijan down
Islamic State claims responsibility for attack in Herat, Afghanistan
Speaker of Armenian National Assembly to temporarily be Acting President
Georgia’s revenues from tourism to surge in 2022 – Galt & Taggart
Italy reports 138,860 COVID cases on Sunday, 227 deaths
Minister of Roads and Urban Development of Iran to visit Azerbaijan
Armenian president resigns
Iraq schedules crude shipments for March loading amid strong demand: Official
Italy's Berlusconi hospitalised in Milan since Thursday
Turkey sees increase in number of real estate purchased by Kazakh citizens in 2021
Talks between Taliban and Western and Afghan representatives underway in Norway
Azerbaijan shares data on number of vaccinated citizens
Iran’s Bahar Azadi gold coin price rebounds
Azerbaijan confirms 1,697 more COVID-19 cases, 526 recoveries
Some 72 COVID-19 cases recorded among those arrived at Beijing Olympics
Thai PM to visit Saudi Arabia as diplomatic relations thaw
US Navy says it detained ship delivering cargo for Houthis from Iran
Biggest problem with US is its support to YPG: Defense minister
Russia confirms over 63,200 COVID-19 daily cases
Azerbaijan prioritizes creation of food safety through local production
Azerbaijani Defense Ministry presents weekly review (VIDEO)
Expat doctors worked alongside Kuwaiti counterparts to revive Kuwaiti health sector: Dr Riyadh Khan
Iran reveals COVID-19 data for January 23
Weekly review of main events of Azerbaijani financial market
Weekly review of main events in Azerbaijan’s ICT sector
Iran discloses volume of electricity generated by Gilan Combined Cycle Power Plant
Weekly review of Azerbaijani precious metals market
Azerbaijan commissions new military facilities (PHOTO/VIDEO)
Tickets are available for two bus trips to Azerbaijan’s liberated Aghdam city
Tank and artillery shells found in Azerbaijan’s Samur-Absheron canal (PHOTO/VIDEO)
Bosphorus Strait temporarily closed in both directions
One person killed, two hurt in Budapest hospital fire -police
Intercity bus plunges into abyss in Turkey’s Istanbul city
An extra meal and snacks twice a day was all it took to improve falling nutrition levels in this tribal district
Almost all Kazakhstan remains in COVID-19 ‘red zone’
Nadal beats Mannarino in battle of left-handers to reach last eight
Azerbaijan holds training exercises in commando military unit (VIDEO)
Georgia reports 9,696 coronavirus cases, 5,408 recoveries, 28 deaths
Training session for reservists continues in Azerbaijan (VIDEO)
Iranian currency rates for January 23
Arab League delays annual summit as COVID-19 bites again
Turkey plans to hold next meeting within "3 + 3" format - Erdogan
New Zealand PM Jacinda Ardern cancels her wedding amid new Omicron restrictions
S.Korea says Iran to regain UN vote after delinquent dues paid with frozen funds
Electricity generation of Iran’s Bandar Abbas TPP surges
Uz-Kor Gas Chemical opens tender for purchase spare parts for analyzers and gas detectors
SCO to consider draft program proposed by Uzbekistan
Iran-Russia annual trade to increase to $10 b from $4 b
Kazakhstan confirms 14,012 new COVID-19 cases in 24 hr
French EU lawmaker Collard joins far-right presidential candidate Zemmour
Pfizer, Moderna boosters up to 90% effective against Omicron: CDC
Turkey’s Turkovac to be tested as booster for Pfizer-BioNTech jab
Guinea junta establishes council to lead transition to elections
All news