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Politics

India's arms import embargo hits makers in Russia, US and Israel

'Late but good step' pushes self-reliance in defense but unlikely to create jobs

Three of India's indigenous Akash missiles, mounted on a truck, are displayed during a rehearsal for the Republic Day parade in New Delhi on Jan. 23.   © Reuters

BENGALURU, India -- India's Defence Ministry has announced that it will cease imports of over 100 items for the Indian armed forces worth $47 billion. The move will affect purchases from major arms suppliers such as the U.S., Russia and Israel worth billions of dollars in the coming years, if the country achieves targeted domestic production.

According to the Stockholm International Peace Research Institute, India was the world's second-largest importer of arms in the 2014-19 period, after Saudi Arabia. During the period, India bought $16.7 billion, 9.7% of the world total. Russia supplied 55% of India's imports, while the U.S. and Israel made up 14% and 12% of the total, respectively.

India's Defense Minister Rajnath Singh on Aug. 9 tweeted that his ministry "has prepared a list of 101 items for which there would be an embargo on the import," and hoped the move will be "a big step toward self-reliance in defense."

Singh stated that the embargo is being progressively implemented between 2020 and 2024. In another statement, he said the government intends domestic arms manufacturers to reach an annual turnover of $25 billion, and expects to export $5 billion worth.

"The defense equipment we buy from Russia and Israel will decrease," A. K. Siwach, a retired major general and defense analyst, told the Nikkei Asian Review. "There are many things like artillery, helicopters, etc., we buy from them which will be produced locally at a cheaper price."

Artillery guns, assault rifles, corvettes, sonar systems, transport aircraft, light combat helicopters and radars are among the 101 items, the government said in a statement. Of the 101 items, 69 will not be imported as of December.

According to Siwach, Indian public and private companies are capable of manufacturing equipment including helicopters and combat aircraft. South Korea's K9 Thunder self-propelled howitzers and the U.S. M777 towed artillery piece will be made by Indian private companies Larsen & Toubro and Mahindra group, respectively.

India recently procured 100 units of the Indian variant of the K9 Thunder, known as the K9 Vajra, from South Korea for 260 million rupees ($3.5 million) each.

Russian President Vladimir Putin and Indian Prime Minister Narendra Modi inspect a Kamov Ka-226T helicopter on the sidelines of the Eastern Economic Forum in Vladivostok, Russia, in September 2019.   © Reuters

"We need not to buy them from outside. It is a late step but a good step," Siwach said. "If we are buying from outside, it is impacting adversely on our economy due to a trade deficit as well."

Traditionally, India has been an arms importer. But the government led by Prime Minister Narendra Modi, who took office in 2014, has been pursuing greater domestic manufacturing under the slogan "Make in India." The defense industry has been included in the scheme to boost production of defense equipment and arms in India.

In the latest move toward defense self-reliance, imports of small arms and light machine guns from Israel, super-rapid 76mm naval guns from Italy, and AK-74 assault rifles from Russia will be stopped. Russian imports will be hugely impacted under the artillery section as India plans to begin manufacturing 122mm Grad rockets by 2022 and electronic artillery fuses and bi-modular charge systems by 2024.

In the area of aviation, India's talks with the U.S. to acquire its medium-altitude long-endurance (MALE) armed Predator-B drone may be canceled due to the ban. Russia's Kamov Ka-226T helicopter will also be produced locally; the Russia-made version costs nearly $5 million each.

Imports of light combat aircraft and helicopters will also be banned, but most of these -- including Tejas Light Combat Aircraft and more advanced light combat helicopters -- are already manufactured locally by state-owned Hindustan Aeronautics. However, India will continue to import fighter jets.

India's plan to ban short-range surface-to-air missiles will hurt the U.S., as the Indian Air Force has already said no to the American NASAMS-II networked air defense system. India also banned imports of naval cruise missiles, which it has been buying from Russia. The ban could also impact the Kilo-class submarines that Russia leases to India.

The Russian BM-21 Grad multiple rocket launcher system is fired during an artillery drill on a range in Rostov Region, Russia, on Nov. 14, 2019.   © Reuters

The ban on these products will impact a large portion of suppliers' defense exports to India.

"One piece of equipment which is very unrealistic to manufacture domestically is engines for small jets," Manoj Joshi, a distinguished fellow of the Observer Research Foundation, a New Delhi think tank, told Nikkei. An import ban on such engines, which India has been procuring from the U.K., Russia and France, is expected to be imposed in December 2024.

"There are no efforts to make such engines in India.... I doubt if India can make such engines within the deadline because of the lack of technology," he added.

An engineer works on an M777 howitzer at the BAE Systems factory at Barrow-in-Furness, England, in April 2011.   © Reuters

Modi's "Make in India" scheme primarily targets job creation by boosting manufacturing. But the embargo on the 101 items may have only limited affect.

"Most of the products on the list are already manufactured in India, so I doubt if the step will increase a lot of employment," said Ajey Lele, a senior fellow at the Manohar Parrikar Institute for Defence Studies and Analyses.

"But it will definitely increase the R&D in the defense sector which is good in the long term for the Indian defense market," the retired group captain added.

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