India's voracious appetite for armsNEW DELHI - News reports this week that India was Israel's biggest arms purchaser in 2006 have once again brought into focus the South Asian country's growing defense requirements.
According to observers, India is expected to make purchases of more than US$10 billion every year over the next decade. Indian Defense Ministry estimates for the 11th Plan show that the country will spend more than $30 billion importing weapons during 2007-12.
"India was Israel's biggest customer, with purchases reaching US$1.5 billion" in 2006, Major-General Yossi Ben-Hanan, the head of Sibat, the Foreign Defense Assistance and Defense Export Department, has been quoted telling reporters in Jerusalem this week. Israel sold $1 billion worth of defense equipment to the US in the same period.
Israel's sales to India include the Barak naval anti-missile defense system, valued at $450 million, Hanan said, adding that Israel was not too concerned about the possibility of US entry into the Indian defense procurement market.
"America sells fighter jets, tanks and helicopters and we do not compete with them," Hanan said. For Israel, missiles and anti-missile systems remain the priority area.
New Delhi has also concluded a $220 million deal with Israel for the supply of 50 Heron drones to the army. Indian Air Force personnel are being trained to operate the Air Early Warning and Control (AWAC) aircraft, of which three are to be delivered soon.
Military aviation is a big area for investment, with the Indian armed forces looking to seal deals for more than 500 aircraft, helicopters and unmanned aerial vehicles over the next few years.
A senior official of the US Aerospace Industries Association (AIA), the main lobby group for the US aerospace industry, has recently identified a number of needs in India's aerospace and defense sectors, including multi-role combat fighters, attack helicopters, radars and missiles.
According to Mark Esper, the vice president of the AIA, who recently led a high-powered US delegation to India, there is a tremendous opportunity for US companies to build alliances with aerospace suppliers in India.
The US entourage comprised representatives from 13 US aerospace suppliers and several main contractors, including United Technologies, Boeing and Lockheed Martin.
Since the visit, the the AIA has said in a survey that more than 86% of US civil and military aerospace contractors (out of 18 that visited India as part of the trade mission to India), including Boeing and Lockheed Martin, are planning to form joint ventures with Indian aerospace companies this year.
It is estimated that Indian purchases in the aerospace field will be well over $10 billion in the near future. Companies ranging from Boeing, Lockheed Martin and BAE Systems to Sukhoi, Embraer, Bombardier and SAAB have booked their space for Aero-India 2007, the international aerospace and defense exhibition to be held in Bangalore next month.
The biggest deal will be the purchase of 126 multi-role fighters for the Indian Air Force at a cost of more than $6.5 billion, which some say will rise to $10 billion. The aircraft contending for this contract are the Russian MiG-35, French Rafale, Swedish JAS-39 Gripen, Eurofighter Typhoon and the US F/A-18 Super Hornet and F-16 Falcon.
The air force is procuring 40 Sukhoi multi-role jets from Russia as a stopgap measure to fill in for the rapid depletion of its combat fleet. India is also seeking to hasten the purchase of 40 second-hand French Mirage-2000 jets, 80 Russian Mi-17 helicopters and six new midair refuelers.
The army is hoping that its $2 billion long-term artillery-modernization project for the progressive induction of towed and self-propelled 155-millimeter 52-caliber guns will take off this year.
In the recent past, India has widened its weapon-supplier base, purchasing the Phalcon early-warning defense system aircraft from Israel in 2004 for $1.1 billion, and a slew of items from France in 2005, including six Scorpene diesel attack submarines for $3.5 billion.
New Delhi has cleared defense procurements worth an estimated $1.5 billion from its public defense enterprises. Nearly $1 billion comprises 20 Jaguar ground-attack jets and an equal number of Tejas light combat aircraft for the air force from the state-run Hindustan Aeronautics Ltd.
Last year, the head of European aerospace giant EADS said on a visit to India: "India is becoming a major player in the aeronautics industry and is a high-priority country for EADS, because it offers market potential and solid competence in aerospace and defense." EADS has announced that it will invest up to $2.5 billion over 15 years in high-tech research and production sites.
Israel has overtaken France, the United Kingdom, Sweden and other countries to become the second-largest defense supplier to India, with the value of arms transfers working out close to $1 billion each year for the period 2002-05, with 2006 a new high.
Russia has managed to retain its position as India's top defense partner, notching up more than $1.5 billion every year because of the deeply entrenched relations between the two countries that hark back to the 1960s. However, its position is under severe threat.
The US is another challenger (after the easing of sanctions) to lead pitched government boardroom battles in India.
Given Washington's extraordinary decision to allow India to acquire nuclear-energy technology on the international market (estimated to be worth more than $100 billion), the Pentagon expects the country to purchase as much as $5 billion worth of conventional military equipment.
Currently, US defense exports to India are at a low $300 million range. Washington will want these figures to improve substantially.
India and the US inked a 10-year defense agreement in June 2005 - the New Framework for the US-India Defense Relationship - signed by then defense ministers Pranab Mukherjee and Donald Rumsfeld.
The agreement is vast in scope and envisages a broad range of joint activities, including multinational operations, strengthening the two militaries to promote security and defeat terrorism, and deepening capacity to cope with the proliferation of weapons of mass destruction.
Last year's US Congressional Research Service report, "Conventional Arms Transfers to Developing Nations", says India bought more weapon systems than any other country in the developing world in 2005, just as it did in 2004. India signed arms deals worth almost double the value of those signed by China in 2005.
The value of arms-transfer agreements inked by India in 2005 stood at $5.4 billion (it was $5.7 billion in 2004). Saudi Arabia was second with $3.4 billion ($2.9 billion in 2004), while China ranked third ($2.8 billion in 2005 against $2.2 billion in 2004). Pakistan came sixth ($1.7 billion in 2005).
According to the report, India has also been the largest arms purchaser in the developing world for the period from 1998 to 2005, sealing deals worth $20.7 billion.
At the same time, India continues to spend a little less than 2.5% of its gross domestic product (GDP) on defense, despite the armed forces regularly demanding that the figure be raised to at least 3%. In contrast, the figures for Pakistan and China hover around 4.5% of their GDPs.
Siddharth Srivastava is a New Delhi-based journalist.