Is India on the cusp of sparking an arms race?

The new Indian government of Prime Minister Narendra Modi has invited global arms producers to invest in the country

Mansoor Jafar

Published: Updated:

Taking a big leap in modernizing the Indian defense industry and domestic arms production, the new Indian government of Prime Minister Narendra Modi has invited global arms producers to invest and set-up sophisticated weapons factories in India.

Media reports say Modi is set to open the defense industry up to multi-billion dollar foreign investments to revamp country’s mostly Soviet-era weaponry, with a view to multiply India’s military capabilities and turn the world’s largest arms importer into an equally big manufacturer.

Responding to the lucrative offer, a number of top officials from France, the United States and Britain are likely to visit India in the coming weeks to discuss the prospects of defense participation.

French Foreign Minister Laurent Fabius will be the first to reach Delhi this week with the intent to finalize a $15 billion stalled deal to sell India 126 Rafale fighter jets.

The Modi government’s policy shift is set to allow huge incentives to foreign arms manufacturers

Mansoor Jafar

U.S. Senator John McCain is also due in India next week with attractive offers, and has already told Senate that Washington should play a role in India’s economic and military rise.

British foreign secretary William Hague and finance minister George Osborne are likely to touch down in Delhi next week, primarily offering Eurofighter Typhoon aircraft.

Moscow, which has remained Delhi’s go-to weapons supplier for decades, outsmarted the three Western weapon giants by sending Deputy Prime Minister Dmitry Rogozin to Delhi two weeks ago. Still, the Western nations have an advantage over Moscow after the Indian foreign minister expressed displeasure with Russia’s recent offer to sell Mi-35 attack helicopters to arch rival Pakistan.

Policy shift

The Modi government’s policy shift is set to allow huge incentives to foreign arms manufacturers, including the option to allow complete foreign ownership of some defense projects. Last week, Commerce and Industry Minister Nirmala Sitharaman said foreign investment would increase country’s defense preparedness and reduce import dependence, saving billions of dollars in foreign exchange. India spent $6 billion last year on weapons imports, mostly from Washington which last year replaced Moscow as India’s top defense supplier.

Three days ago, Delhi announced defense manufacturers were allowed to produce without licenses, paving the way for easier partnerships of Indian firms with foreigners. Presently, foreign companies take little interest in investment as they can only invest 26 percent in Indian defense projects without committing to technology transfer.

As part of election campaign, BJP leadership announced raising the limit to 49 percent, but still it was not sufficient to attract U.S. and European giants of defense production. Recently, India’s Department of Industrial Policy and Promotion circulated a discussion document that proposes allowing up to 100 percent foreign direct investment (FDI) in defense production. It recommends capping foreign investments at 49 percent which do not involve transfer technology and 74 percent ceiling where foreign investor is ready to share technology.

Following Tel Aviv’s policy

India, which already has a close defense cooperation with Israel, seems to be following Tel Aviv’s policy of wild pursuit of acquiring arms and weapons production. Israeli prime minister of the 1960s, Golda Meir, was one of the chief architects of the similar policy of acquiring weapons from the U.S. and other Western nations at any cost, which was later translated into acquiring weapon-manufacturing capabilities through inviting joint ventures in Israel. It was aimed at expanding Israeli boundaries deep into Palestinian lands and overpowering Arab countries resisting Israel’s annihilation of Palestinian Arabs with a view to drive them out of their homeland.

However, the final decision on increasing the FDI ceiling would be taken by Modi and Defense Minister Arun Jaitley since it is facing resistance from political circles, the military establishment and the opposition. AK Antony, India’s longest serving defense minister of the opposition Congress party said allowing higher foreign investment in defense would be “suicidal” for the country.

Open house policy

Only time will tell whether the open house policy of joint weapons production takes India towards defense and economic supremacy in the region by making Delhi an exporter of arms to the outside world. Or, it could turn out to be suicidal as feared by the opposition and military establishment because it risks exposing India’s intricate web of secret arms deals and other defense-related operations.

For the majority of analysts, the chances of Modi’s success outweigh the opposition’s fears since India’s corporate sector has become a key pillar of his government and is hungry for huge foreign investments. They ruled out Modi’s war mania as being behind this policy and say its driving force is purely economic and aimed at cashing in on business opportunities out of the lucrative field of defense production.

However, the wild pursuit of weapons production will definitely concern India’s arch rival and nuclear-armed neighbor Pakistan against whom Delhi had fought four full-fledged wars and many smaller skirmishes in six decades. One thing is sure; it will start a fresh round of arms acquisition in its neighbor and pull Pakistan into this mad race.


Mansoor Jafar is Editor of Al Arabiya Urdu based in Islamabad. He can be reached via Twitter: @mansoorjafar

Disclaimer: Views expressed by writers in this section are their own and do not reflect Al Arabiya English's point-of-view.
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