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India’s cautious military buildup

June 1, 2015

Originally published in Aspenia Online of the Aspen Institute Italia

In the last couple of years, the Indian government has purchased, and in certain cases already received, a number of foreign-produced military aircraft. These include US-made P-8I Neptune long-range maritime patrol aircrafts by Boeing and C-130J transport planes by Lockheed as well as, more recently, French-made Rafale fighter jets by Dassault Aviation. This move reflects a dual concern by Indian authorities long-reliant on imports from the Soviet Union first and then Russia: the country’s military fleet is in dire need of both modernization and, for this to happen, to diversify its sources. These twin goals are becoming ever more urgent as India’s regional context evolves and the threats to its national security, at least as perceived by Delhi, grow both in breadth and depth. Going forward, it remains to be seen whether India also manages to move  on two other fronts, increasing military production at home and rebalancing the share of defense spending going, respectively, to the army, the air force and the navy.

“The government of Prime Minister Narendra Modi came into office last year after a long period during which the Congress-led executive did not provide effective decision-making on defense acquisitions and procurement, with the result that, in the last ten or so years, we have seen a reduction in India’s defense capability,” says Rahul Roy-Chaudhury, Senior Fellow for South Asia at The International Institute for Strategic Studies (IISS) in London. “Modi immediately promised that he would push for an increase in defense spending and that he would make the tough decisions that had long been wanting.” With its first full defense budget, which was unveiled in late February, India’s new government increased defense spending by less than 8% over last year (or nearly 11% if one bases the calculation on a revised estimate of what was allocated in 2014-15), for a total of approximately US$40 billion. Though a step in the right direction, this was seen as a little too cautious, and somewhat disappointing on the part of Modi. “The government is trying to bring down the deficit,” says Roy-Chaudhury. “But this 8% increase is not sufficient to make the major acquisitions that are required.”

Even if the overall funding available this year will be more limited than some experts had hoped, India’s defense goals are ambitious and, according to Roy-Chaudhury, threefold. Beyond wanting to plug the gaps that exist as a result of poor defense management on the part of the previous administrations, he says, Prime Minister Modi also wishes “to beef up the sharper end of capabilities, like combat aircrafts and the navy submarine fleet, and to develop a strong local component of defense manufacturing as part of his overall Make in India campaign”. That program aims to make this country an attractive industrial hub for domestic and foreign firms alike and, at the defense level, to wean it from its addiction to imports – as India is the top military importer in the world.

For now, however, the Make in India effort is still in its infancy and it will take some time for it to kick in. A first test of its effectiveness is the Rafale deal with France, which calls for India to immediately purchase 36 fighter jets off the shelf, with the plan to manufacture, at least in part domestically, about 90 more in the future. “India needs to modernize its armed forces to meet the multiple challenges it faces, this is where procurement from other countries fits in,” says Amit Cowshish, a former Financial Advisor for Acquisition at the Indian Ministry of Defence and presently a Distinguished Fellow with the Indian Institute for Defence Studies and Analyses in Delhi. “In the long run, the government seems to be more determined than ever before to adopt the Make-in-India route to meet the requirement of its armed forces. This does not, however, rule out tie-ups with foreign companies. Indeed, these are essential as, without them, Indian companies will take longer to become prime suppliers of military hardware to the Indian armed forces.” In this context, focusing acquisitions on the more technologically advanced West (in 2014, the US ousted Russia as India’s top arms supplier) could help speed up the transfer of know-how to India.

Delhi’s growing ambitions are no surprise given Asia’s intensifying competition on the defense front and the progressively more complex regional dynamics that are developing. “I think there has been a fundamental shift in India’s perception of security threats, from traditionally a single-handed focus on Pakistan to the view that China presents a mounting strategic challenge,” says Roy-Chaudhury. Right or wrong, Delhi sees more and more assertiveness on the part of Beijing, starting with the long-simmering border dispute over the regions of Aksai Chin in the North, claimed by India but controlled by China, and of Arunachal Pradesh in the East, claimed by China but controlled by India.  This is a dispute which has poisoned the relationship between the two countries for more than half a century (with war breaking out briefly in the fall of 1962 and the border now defined by the still controversial Line of Actual Control). Delhi also fears China’s encroachment in the Indian Ocean, its alleged support for countries that surround India (including Pakistan) and other power-projection efforts such as the so-called New Silk Road Initiative, which Chinese President Xi Jinping has dubbed “One Belt, One Road” and which aims to further economic and political integration among dozens of countries from China to the Caspian Sea along the route of the old Silk Road. On the backdrop of mutating regional concerns, the Modi government also continues to be confronted with the risk of domestic volatility, stemming from the armed Naxalite Maoist groups in the East and the unending question of Kashmir in the North. “The impact of the US drawdown from Afghanistan and the rise of ISIS have also added new dimensions to India’s security worries and there now seems to be a growing concern for cybersecurity and other forms of asymmetrical warfare,” says Cowshish.

Tending to these different needs will be no easy feat and may also require some rebalancing of the country’s armed forces. Today, India has a standing army of more than a million men and women, which sucks up well over half of the overall defense budget – a historical legacy of the fact that, covering a very large territory, it has traditionally faced primarily land threats. Additionally, the personnel-heavy composition of the Indian armed forces, which also comprises a pretty substantial air force and navy workforce, means that the bulk of the money spent on defense, around 60%, goes to pay salaries and benefits, which doesn’t leave much space to push forward with the kind of expensive weapons system acquisitions, or development, India needs going forward. “People have questioned this,” says Roy-Chaudhury. “There should be a reorganization and that the navy, which now has a much more important role to play in the Indian Ocean, should get a larger share than what is getting now.” This of course doesn’t mean that the army is bound to see its relative role reduced by much, only that the navy might see its own resources increased to some degree. “India has more than 15,000 km of land border, approximately 40% of which is with China and Pakistan,” says Cowshish. “In my mind, the army will continue to account for more than half of the defense budget, followed by the air force and navy.”

Fortunately for India, it looks like the government will have some room to maneuver, since military spending only absorbs around 1.8% of India’s GDP, while it sucks up around 2.3% of GDP in China and Pakistan. “Remember that oil prices are down, the deficit is down, the Indian economy is in better shape than it has been in the last few years and strong growth is expected,” says Roy-Chaudhury. “So there is great optimism in the defense budget area, as India has always looked at it in terms of percentage of GDP, so if GDP expands at a 7% annual clip, then you can put 2% or 2.2% toward the military and it is not going to be much of an additional burden on the economy.” In the end, however, it is important to keep expectations in check. “It is difficult to predict what will happen in future, but my feeling is that India is going to remain focused more on economic and social development,” says Cowshish.  The present government may wishe to give diplomacy a chance to resolve the conflicts in the region, so we may not see a huge increase in the defense budget in the coming years.

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