The Europeans have been willing to meet DAP guidelines, but what India has not been able to convince them of is operating Russian-style joint ventures

Making India self-reliant in the domain of defence equipment manufacturing and procurement has been one of the crucial vectors for empowering the country under the ideal of Atmanirbharta amid fluid geopolitics. Bold reforms and import list restrictions have been launched to speed up this push. What role does Europe play in this crucial matrix? For navigating the complex terrain of convergences with like-minded countries, critical drivers need to be identified and operationalised with the required political will and flexibility.

However, the various strands of defence cooperation between India and European players are not explored well enough. Rhetoric aside, mutual engagement needs to be etched in realistic terms to maximise gains from potential cooperation.

Within India’s military-industry landscape, the critical drivers of self-reliance can be summed up as below.

Diversifying India’s Import Basket

Russia’s war on Ukraine has demystified its formidable military stature, planning, and equipment. India’s neutrality on the war is related to its massive dependence on arms imports from Russia. However, research shows that while Russia remains the single-largest supplier to India, nevertheless, the trend indicator values (TIVs) of India’s imports from non-Russian sources have been surging in the last decade. The TIV analysis also infers that if this trend continues over the next decade along with India’s current efforts at self-reliance, the margin between Russia’s share and other suppliers, notably the West, will shrink further.

This dependence is likely to see further decline also because of the long-standing impact of the Western sanction regime. High-tech military shortages are expected to arise in the Russian military architecture. Sanctions might starve Russia of computer chips and semiconductors that could be used in advanced military equipment, which would ultimately denigrate its ability to not only power project in the future but also in continuing as a dependable supplier to India. Clearly, India will need to diversify in time.

Involving Private Players To Improve Efficiency

The current Budget includes provisions to open up defence research and development (R&D) and procurement to the private sector by giving 68 per cent of the capital acquisition budget for purchasing from the domestic industry and 25 per cent of the defence R&D budget for the private sector, including start-ups.

There’s also a need to increase spending on R&D. India is the world’s third-largest military spender and accounted for almost an 11 per cent share of the global arms trade (between 2017 and 2021). These arms imports reflect poorly on the Indian defence R&D ecosystem. According to the Lok Sabha’s Standing Committee on Defence, India spends a paltry 6 per cent of the defence budget on R&D compared to China’s 20 per cent and the US’ 12 per cent.

The Narendra Modi government is undertaking a series of steps to boost the national R&D base by involving the private sector and start-ups. This year, for instance, the Union Budget for FY 2022-23 has allocated Rs. 1,200 crore for academic defence research.

Where Does Europe Fit In?

For Europe, Russian President Vladimir Putin’s war in Ukraine has perpetuated a fundamental restructuring of the global order with upended strategic designs and recalibrated responses.

For the Europeans, it would, among others, translate into enhanced cooperation with relevant strategic partners in the Indo-Pacific and building on interoperability. For India, it would be yet again an attempt at diversifying its import basket as Russia’s growing arms relationship with China is a destabilising factor for India. The post-Cold War era saw Russia’s posture changing from refusing to sell weapons to China to now providing both countries with identical technologies.

India’s Defence Offset Policy And Europe

The 2016 DOP has been the chief instrument for India to develop its indigenous defence manufacturing sector. As per the DOP, for purchases over Rs 2,000 crore, a foreign company has to ensure a 30 per cent domestic value addition in India.

Next came the Defence Acquisition Procedure (DAP) 2020, the second attempt by the Modi government to streamline India’s defence procurement system and promote ‘Make in India’ in defence manufacturing. The DAP puts emphasis on higher indigenous content in procurement and faster acquisition. India hopes that Europe will cooperate along the lines of the 2016 and 2020 reforms and will promote India’s DOP. While some progress has been made, impediments spring up from time to time.

Europeans Hardly Ever Finish As The Lowest Bidders

The Europeans have hardly ever emerged as a lowest bidder for India, a slot often taken up by Russia. Moscow’s power in this domain derives not only from the sheer volume of sales but from its willingness to provide weapons systems and technologies that no other country will export to India because of their own national regulations or willingness to do so at an unaffordable cost.

However, lowest bidding is not an obstacle anymore. Cheapest deals matter, but India has been forthcoming in identifying critical technologies and requirements and has superseded lowest bidders when a certain quality was required. The Europeans have also been willing to meet DAP guidelines, but what India has not been able to convince the Europeans of is operating Russian-style joint ventures.

France’s Unique Position

Among Europeans, France is by far the closest defence partner for India. Apart from the Rafale fighter jet deal, there has been cooperation in the Mirage fighters and their upgrade – all of which are of vital importance to the Indian Navy and Air Force. India had entered into a $4.16-billion contract with a French firm to build six Scorpene submarines, but the project has been reset to the request for proposal (RFP) stage.

France has considerably scaled up defence cooperation with India by offering the Barracuda Nuclear Submarines last year with a ‘Make in India’ element. Shortly after the Rafale deal, this French offer to provide India with the know-how to make nuclear submarines has the potential to establish France as India’s pre-eminent defence partner, a position currently held by Russia.

In April 2019, the Indian Air Force issued a Request for Information (RFI) or initial tender to acquire 114 Multi-Role Fighter Aircraft (MRFA) jets at a cost of around $20 billion. It was hailed as one of the world’s biggest military procurement programmes in recent years to be carried out under the ‘Make in India’ initiative. In 2022, the top contenders for the deal include Lockheed Martin’s F-21, Boeing’s F/A-18, Dassault Aviation’s Rafale, the Eurofighter Typhoon, Russian aircraft MiG 35, and Saab’s Gripen. Rafale, by far, is the closest contender.

Route To Indigenisation

How can private players’ involvement be maximised in indigenisation efforts? Only a few finished pieces of the K-9 Vajra-T guns were imported from South Korea. A conduit was identified in India who then got knock-down kits from South Korea and assembled them in India in tune with our DAP programme. Similarly, in the case of M777 Ultra-Light Howitzers from the US, the same logic applied. However, when we look at Europe, the most popular example is still the Czech Republic’s Tatras. BEML, a conduit, has been getting knock-down kits from the Czech Republic and assembling it all in India for years.

Assembling in India by a conduit does seem a compromise but works well as a route to indigenise defence procurement by upping the involvement of private players as per the DAP 2020 guidelines. While this route should be better explored for expanding cooperation with the Europeans, India’s challenges, however, lie in developing a fully-fledged domestic industrial base and using it to positively influence its defence partnerships.

Efficient Coordination Is Lacking

Recently, France backed out from developing six conventional submarines for India due to air-independent propulsion (AIP) system issues. Not only France but other Original Equipment Manufacturers (OEMs), including Germany and Russia, backed out as well.

For a foreign player to back out after the RFP has already been floated, reflects bureaucratic hurdles and lack of coordination at the level of ministries, armed forces and the Defence Research and Development Organisation (DRDO) in formulating the RFP with unambiguous requirements before short-listing the OEMs. It should be noted that the P-75 project has been on since 2008 when the first RFP was floated but getting delayed ever since. Once again, the P-75 RFP deadline has been extended to December 2022.

Since defence cooperation between India and European countries is, in many respects, highly fragmented, the European Union is not seen by India as a whole, but as a group of countries. As a result, it engages with each one separately on a bilateral and case-by-case basis and not collectively and strategically over multiple projects, with an exception of France.

Europe, on the other hand, also needs to better understand India’s continental and maritime security challenges and has to realise that an empowered India is in the best interest of Europe’s Indo-Pacific worldview.

So, despite limitations, pragmatic choices will continue to be at the core of India’s defence industrial strategy, and defence cooperation with strategic allies in Europe is likely to deepen.