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Global Defence Majors Take Another shot at India’s Arms Bazaar

India is too large and too diverse a marker for global defence majors to give a miss. Thus, persistently for decades companies from Europe and the United States have been making a beeline for exporting arms to India in varied modes – direct sales, license production and limited technology transfer.

The attempts see a cycle of sorts with hopes and expectations of defence deals with India going up while at times these are down for varied reasons from unsupportive government policies to a drive for Make in India. This drive was last taken up in 2020-2021 with the Prime Minister leading the call and the defence ministry publishing a number of negative lists now named as positive lists outlining weapons systems and ancillaries that were reserved for procurement from Indian companies alone.

The AtmaNirbharta in defence narrative fobbed off many who did not read the fine print which denotes that only 30-50 percent of the cost of procurement has to be based on Indian sourcing. Those who understood the catch have cashed in billing sundries such as software and training in this cost.

Nevertheless in general the mood was wary, but in the past couple of months there is a new hope in the western defence majors, reasons for which are not far to seek.

One facet is that new procurements from Russia which has been the mainstay of India’s defence imports are likely to be extremely limited, only existing contracts will be executed and serviced, that too at a time penalty.

With the Russians out there is hope for others in the global arms market to chip in their wares and impressive attempts are being made.

Then India is projecting itself as a defence exports hub to tap the vast Indo Pacific market including South and South East Asia as well as possibly the Middle East.

And for the first time perhaps India is actively wooing defence companies at the highest level with Defence Minister Rajnath Singh during his trips to Italy and France last month had extensive interactions with the companies as well as defence industrial bodies in these countries. Such one on one interaction with a host of foreign majors is not seen in the past.

The proof is that a number of foreign defence companies are setting up shop in India. Here is a list which is by no means comprehensive and provides just the flavour of the things to come.

Saab the Swedish defence major which has been a feature of the India defence scene for over five decades is first on the blocks.

The Economic Times reported that Government of India has cleared the first 100% foreign direct investment (FDI) in the defence sector, with permissions granted to Sweden's Saab to set up a new facility that will manufacture rocket launchers for the infantry. FDI proposal, valued at under ₹500 crore, was cleared last month. Economic Times quoted Mats Palmberg, chairman and managing director, Saab India  as saying, "We are proud to be the first global defence company to be approved by the Indian government for 100% foreign direct investment for our new Carl-Gustaf manufacturing facility in India." "This is another step in Saab's commitment to 'Make in India,' and we look forward to continuing our collaboration with our Indian partners and to supporting the Indian armed forces with production of Carl-Gustaf in India," he added as per the Economic Times.


Airbus is also making a large pitch after the C 295 joint production facility being set up in Gujarat. Along with state-owned Hindustan Aeronautics Ltd (HAL), the European major is setting up a Maintenance, Repairs and Overhaul (MRO) facility for Airbus-320 family aircraft at Ozar in Nashik, and it has already developed infrastructure and hangars there.

HAL and Airbus signed a memorandum of understandingv (MoU) in Delhi for starting the MRO facility at HAL Nashik.

Jorge Tamarit-Degenhardt, who heads the C295 transport aircraft programme for Airbus has asserted that the company will be investing in India including assistance in developing the MSME sector.

Merlinhawk Aerospace Pvt. Ltd. has signed a joint venture agreement with Italy’s Vega Composites S.r.l. to establish a manufacturing and design facility in the defence corridor in Tamil Nadu for advanced composites material-based products under the name Merlinhawk Composites and Engineering Private Limited.

ThyssenKrupp AG offered India the 214 version of HDW-class submarines for the $4.8 billion deal for six submarines under Project 75I even as Spanish Company Navantia is also bidding strongly for the same project. Navantia is also pitching for the Indian Navy’s Landing Port Dock [LPD] project.

CAT Marine, a subsidiary of Caterpillar Marine, has signed a memorandum of understanding (MoU) with Garden Reach Shipbuilders & Engineers Ltd (GRSE) for providing engines for ships.

There is much buzz in Hyderabad – India’s second cyber capital after Bengaluru where several foreign majors as Lockheed Martin and Safran are expanding their existing facilities in the city.

This is just a few of the many companies vying for the Indian defence market and some seem to be committed to continue in the years and decades ahead despite the complex defence procurement regulations which can also change with the government.

Note - Security Risks Asia has no interests personal and/or corporate in any of the defence majors mentioned above, nor is this a sponsored feature.

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