The international arms industry is a lucrative business globally. Generally, weapons and maintenance equipment include infantry weapons, vehicles, artillery, aircraft, UAVs, radar systems, and vessels. Logistical and operational assistance is also provided by the industry.
80% of global arms are exported by six countries: USA, China, France, Germany, Russia, and the UK. On the other hand, India, Saudi Arabia, Egypt, Australia, and China are the five largest importers of arms. Usually, military contracts are awarded to international organizations based on strategic alignment. Due to the proliferation of military weapons, numerous regulatory frameworks have been developed by international bodies. India has imported from Russia, United States, Israel and France in recent years.
Is India a Lucrative Defense Market for USA?
Modernization stands central to Modi’s regime in India, especially with regard to its defense industry. The focus of administration is on self-reliance and production at home. India has the third largest armed forces in the world and plans to spend billions of dollars on defense equipment which makes it a lucrative market for the US. India needs advanced weapons and up gradation of military equipment considering the strained relations with its immediate neighbors. It is one of the leading importer of military, stealth, and security equipment. The lucrativeness of India as a market for military equipment can be assessed from the fact that India has increased space for foreign investments and has introduced policies that are FDI and trade-friendly.
On the other side, US is the most prominent and specialized military equipment and weaponry producer. US is the largest military spender, with 38% of global expenditure. Out of the top 10 defense manufacturers in the world, five are located in the U.S namely Lockheed Martin, Boeing, Northrop Grumman, Raytheon and General Dynamics.
The U.S arms trade is monitored U.S. Department of State’s Bureau of Political-Military Affairs. The government is involved by either Foreign Military Sales (FMS) arranged by Pentagon or Direct Commercial Sales (DCS). The U.S. Munitions List (USML) has 21 categories, and under DCS, regulatory permits are required for sales of defense products and services totaling about $115 billion annually. These transactions are privately negotiated between American businesses and foreign end users. The U.S and India are inherently liberal democracies with ideological alignment which makes it relatively easier for investors from the US to enter into India’s market.
In the last decade, India has acquired over $18 billion worth of defense equipment from the United States. With shipments of aircraft, helicopters, and missiles valued at $22 billion, the United States has risen to the top of India’s list of arms suppliers.
The P-8I Poseidon long-range maritime patrol aircraft and the C-130J transport aircraft, procured from U.S by India are being considered for repeat orders. Chinook heavy-lift helicopters and Apaches that were purchased from the U.S and Transport aircraft C-130J Super Hercules have also been extensively used in Ladakh and Indian LAC.
Indian Military Industry
The export of arms and defense equipment in India was $160 million in the fiscal year 2021 to 2022 with 70% contribution coming from the private sector and the remaining 30% from the public sector. The defense exports, saw a stark increase over the previous fiscal. South-East Asia, West Asia, and Africa were the other three principal destinations for Indian exports. ASEAN countries have shown particular interest in Indian weaponry. In early 2022, a contract worth $375 million was agreed upon with Philippines which mandated BrahMos supersonic cruise missiles sales to Philippines. The export of Arjun Mk-1A tank, Astra beyond-visual-range missile, Tejas light combat aircraft (LCA) Mk-1A, and Pinaka systems is also being pushed. It has been revealed that one seventy five novel and recently developed AI Products and tech in defense are in making. The domain of these products lies in automation, unmanned equipment, robotics, intelligence, reconnaissance, surveillance and command control systems.
Land-based weapons
This category encompasses small arms to heavy ground artillery. Many producers of land-based weapons are small in size and dispersed geographically. Since the international regulatory framework for these weapons is lax, the trade statistics for guns, rifles, tanks, carriers, and other small weapons are vague. Some of the largest gun companies in the world include Smith & Wesson, Remington Outdoor, Beretta, Sturm, Ruger Co. and FNS. Many heavy artillery and tank manufacturers are concentrated in China and Russia. Of course, neither India nor the United States do defense business with China. And sanctions on Russia have resulted in a production halt of ground based weapons. Indigenous firms in India such as Bharat Forge Limited, Tata Advanced Systems Limited, Munitions India Ltd. and Mishra Dhatu Nigam Limited produce land-based weapon systems. The Indian Army has tried to procure a range of products from the U.S including gun systems, high altitude tents, surveillance quad copters, smoke grenades for tanks, bulletproof jackets, armored earth movers and protected mobility vehicles.
Naval weapons
To establish authority over sea passages and strategic water-based territory countries have built magnificent naval fleets. The most rapid progression was seen in Chinese naval fleet increasing its presence in the region. By technological expertise however, U.S fleet still overshadows other militaries. Few of the largest manufacturers of naval warheads and submarines are General Dynamics Corporation, Huntington Ingalls Industries Inc., BAE Systems PLC, Naval Group SA and United Shipbuilding Corporation. The main Indian producers of naval defense equipment include Goa Shipyard Limited, Hindustan Shipyard Limited, GRSE and Mazagon Dock Shipbuilders Limited.
Aerospace weapons
Out of all armed forces units, the most technically complex equipment belongs to Air Force. The technological prowess for developing such high end weapons is limited, so the market is dominated by few companies. The aerospace weapons include missiles, aircraft for both land and naval based systems. Majority of the players in this market are concentrated in Europe or North America. However the U.S is dominating the aerospace export. Prominent aerospace firms include Rolls Royce, Hindustan Aeronautics Limited, BAE Systems, Saab AB, Dassault Aviation, Sukhoi, Mikoyan, EADS, Leonardo, Thales Group, Lockheed Martin, Northrop Grumman, Raytheon Technologies, and Boeing. India’s Defense Ministry has signed multiple offset contracts for joint production worth more than $13 billion by 2027 to procure fighter aircraft from the United States, France, Russia and Israel. The Indian Air Force awarded a contract to Lockheed Martin and Marshall Aerospace for the 12-year maintenance inspections of the C-130J Super Hercules.
In the last decade, India has acquired over $18 billion worth of defense equipment from the United States. With shipments of aircraft, helicopters, and missiles valued at $22 billion, the United States has risen to the top of India’s list of arms suppliers.
The P-8I Poseidon long-range maritime patrol aircraft and the C-130J transport aircraft, procured from U.S by India are being considered for repeat orders. Chinook heavy-lift helicopters and Apaches that were purchased from the U.S and Transport aircraft C-130J Super Hercules have also been extensively used in Ladakh and Indian LAC.
Indian Military Industry
The export of arms and defense equipment in India was $160 million in the fiscal year 2021 to 2022 with 70% contribution coming from the private sector and the remaining 30% from the public sector. The defense exports, saw a stark increase over the previous fiscal. South-East Asia, West Asia, and Africa were the other three principal destinations for Indian exports. ASEAN countries have shown particular interest in Indian weaponry. In early 2022, a contract worth $375 million was agreed upon with Philippines which mandated BrahMos supersonic cruise missiles sales to Philippines. The export of Arjun Mk-1A tank, Astra beyond-visual-range missile, Tejas light combat aircraft (LCA) Mk-1A, and Pinaka systems is also being pushed. It has been revealed that one seventy five novel and recently developed AI Products and tech in defense are in making. The domain of these products lies in automation, unmanned equipment, robotics, intelligence, reconnaissance, surveillance and command control systems.
Land-based weapons
This category encompasses small arms to heavy ground artillery. Many producers of land-based weapons are small in size and dispersed geographically. Since the international regulatory framework for these weapons is lax, the trade statistics for guns, rifles, tanks, carriers, and other small weapons are vague. Some of the largest gun companies in the world, include Smith & Wesson, Remington Outdoor, Beretta, Sturm, Ruger Co. and FNS. Many heavy artillery and tank manufacturers are concentrated in China and Russia. Of course, neither India nor the United States do defense business with China. And sanctions on Russia have resulted in a production halt of ground based weapons. Indigenous firms in India such as Bharat Forge Limited, Tata Advanced Systems Limited, Munitions India Ltd. and Mishra Dhatu Nigam Limited produce land-based weapon systems. The Indian Army has tried to procure a range of products from the U.S including gun systems, high altitude tents, surveillance quad copters, smoke grenades for tanks, bulletproof jackets, armored earth movers and protected mobility vehicles.
Naval weapons
To establish authority over sea passages and strategic water-based territory countries have built magnificent naval fleets. The most rapid progression was seen in Chinese naval fleet increasing its presence in the region. By technological expertise however, U.S fleet still overshadows other militaries. Few of the largest manufacturers of naval warheads and submarines are General Dynamics Corporation, Huntington Ingalls Industries Inc., BAE Systems PLC, Naval Group SA and United Shipbuilding Corporation. The main Indian producers of naval defense equipment include Goa Shipyard Limited, Hindustan Shipyard Limited, GRSE and Mazagon Dock Shipbuilders Limited.
Aerospace weapons
Out of all armed forces units, the most technically complex equipment belongs to Air Force. The technological prowess for developing such high end weapons is limited, so the market is dominated by few companies. The aerospace weapons include missiles, aircraft for both land and naval based systems. Majority of the players in this market are concentrated in Europe or North America. However the U.S is dominating the aerospace export. Prominent aerospace firms include Rolls Royce, Hindustan Aeronautics Limited, BAE Systems, Saab AB, Dassault Aviation, Sukhoi, Mikoyan, EADS, Leonardo, Thales Group, Lockheed Martin, Northrop Grumman, Raytheon Technologies, and Boeing. India’s Defense Ministry has signed multiple offset contracts for joint production worth more than $13 billion by 2027 to procure fighter aircraft from the United States, France, Russia and Israel. The Indian Air Force awarded a contract to Lockheed Martin and Marshall Aerospace for the 12-year maintenance inspections of the C-130J Super Hercules.
Conclusion:
In order to meet the demands of “Make in India,” Indian businesses are collaborating with global organizations. The import demands and export capabilities of Indian Defense industry looks very promising. Apart from diplomatic and international political challenges, India is a good market for trade. Finding trustworthy partners in India to help with deal-making and reducing these problems is highly encouraged for American businesses, especially when it comes to government contracts.
