10:The Defense Industry of India

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Levels, 1978-88 . . . . . . . . . . . . . . . . 10-2. Leading Arms Importers, 1985-88 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-3. Indian Major Conventional Weapon Import Deals, by Type of Weapon, 1970-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-4. Indian Major Conventional Weapon Import Deals, by Country of Origin, 1970-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-5. Indian Licensed Production of Major Conventional Weapons, . . . . . . . . . . . . . . . ....*..** . . . ....**..* by Type of Weapon, 1970-90 - 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-6. Indian Licensed Production of Major Conventional Weapons, by County of License Origin, 1970-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-7. Production of the Defense Research and Development Organization . . . . . . . . . . . . . . . . . Table 10-1. Indian 153 154 156 156 157 157 158 153 154 155 155 155 155 157 Table Page 1987- 1988 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 Chapter 10 The Defense Industry of India INTRODUCTION India 9s military industrial complex is one of the oldest, largest, and most divers~led in the develop- ing world. The expansion of India 9s defense indus- trial capacity, particularly in the 1980s, was largely conditioned by the South Asian arms build-up among China, Pakistan, and India (see figure 10-1). The growth of the Indian arms industries was fueled both by increases in domestic defense spending, which increased from $5.5 billion in 1980 to $9.5 billion in 1989, and by foreign military aid and arms transfers. Pakistan 9s receipt of $1.6 billion in U.S. military assistance (1982-87), including the acquisi- tion of the F-16, was met by India 9s acceptance of a $1.74 billion arms transfer (1988-93) from the Soviet Union, which included licensed production of the Soviet T-72 tank, MiG-23 interceptor, and the MiG-29 Fulcrum. 1 India was the third largest recipient of arms transfers in the developing world during the 1985-89 period and the largest nonoil- producing arms importer (see figure 10-2). Indian defense officials have also argued that the growing superpower presence in the Indian Ocean was a factor motivating its arms build-up, including the experience during the 1971 India-Pakistan War, when the U.S.S. Enterprise was deployed in the Bay of Bengal. The introduction of sophisticated arms to the region is also cited as a stimulus for increased domestic production of weapon systems. India 9s en- hanced naval capability, which includes submarines and aircraft carriers, has already affected two of the region 9s six island states, the Maldives and Sri Lanka. Indian forces suppressed a coup against the government of President Gayoom of the Maldives in November 1988, and India continues to frustrate Sri Lanka 9s efforts to suppress its Tamil separatist guerrillas. To secure its strategic objectives, the Indian Government has established a large scale defense industrial sector that includes 9 state-owned defense industries, 33 ordnance factories, and 34 R&D establishments and laboratories. The long-term goal has been to build an indigenous defense industrial Figure 10-1-South Asia Defense Expenditures and Military Force Levels, 1978-88 Constant 1988 Millions of dollars, billions troops 30 ~- 8----- - ------- ------------ d - d d - c c d d d d c c c c- d d d- 9 9 d d d- d d d d d d d d- d d- d d d d d c 9 d 9 d- d d- dT 5 Chinese armed forces (right scale) 1 -------- ----------------- / . t -4 s - 4 _- -\- -_ 4- Chinese defense expenditures (left scale) 20- 8 - d - d - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . t 3 15 + c d------------ d d d d--- ---------` "-"" -"-------""---"-""-"--"--"-"`""""""-"-""""""""""t I Indian armed forces (right scale) I 1 2 10 5 F""'"" -- """ - """ - """' - -"- - """""'" ;- """""""""""""" : " E 4 4 4 * -- -- 4 /- - - - A /-- 1. 4 4/ Pakistani armed forces 1 1 c c~ d% d-~ d d - - d~ 9- d d d d d d d d d d d d d c c- d d d- d d d d 9 d d d d c c d (r 9 ght d sR 9 e) d d d d c c d d Indian defense expenditures (left scale) / ---- ---b---- --- 4 4 -- 4 -- ------ -- ... . 4 ----------- 4 , ------------- ---.--- d d d d d d ... ... -.. ... 4 ----------- - 0 Pakistani defense expenditures (left scale) 1 ,! , I i I 1 , 0 1978 1980 1982 1984 1986 1988 Year SOURCE: Office of Technology Assessment, from data in U.S. Arms Control and Disarmament Agency, World Military Expenditures and Arrns Transfers, 1989 (Washington, DC: U.S. Government Printing Office, 1990). base, capable of supplying a wide range of advanced defense equipment. India 9s policy of self-reliance in defense produc- tion has been complemented by imports of sophisti- cated weapon systems and related technologies primarily from the Soviet Union (see figures 10-3 and 10-4 on Indian arms imports and figures 10-5 and 10-6 on Indian licensed production activities). The partial success of this strategy is reflected by India 9s advanced production capabilities (for a Ron Production in (New ABC 154 q Global Arms Trade Figure 10-2-Leading Arms Importers, 1985-88 Iraq Saudi Arabia India Iran Cuba Vietnam Syria Afghanistan Angola Israel Egypt Pakistan Pi . . . . . m . . . . . . . . . . . . . . . . . H E3El 01234567 Constant 1988 dollars, billions s 1985 u 1986 u 1987 u 1988 SOURCE: Office of Technology Assessment, from data in U.S. Arms Control and Disarmament Agency, World Military Expendifures and Arms Transfers, f989 (Washington, DC: U.S. Government Printing Office, 1990). developing nation) in all weapons categories: jet fighters, aircraft, and helicopters; main battle tanks and armored personnel carriers; diesel-powered submarines and frigates; ballistic missiles; elec- tronic and communication equipment; and small arms, artillery, and ammunition. However, the Indian defense industries remain dependent on foreign technology, particularly sys- tems produced under license from the Soviet Union. In this regard, the mixed experience of India 9s defense industrialization demonstrates that succes- sive licensed production of sophisticated weapon systems augments but does not guarantee the transi- tion to independent local design and production. Over the past four decades, India 9s defense produc- tion program has suffered from the relative isolation of defense-related production activities. There is little technology spillover into the private manufac- turing sector, and civil industrial input to defense production is negligible. Since 1985 the Indian Government has encour- aged greater interaction between defense production and civil industry by promoting private sector participation. For instance, a private firm, Kir- loskars, is providing the diesel engine for the Arjun main battle tank. The tank 9s computer is being designed by Nelco and Bharat Electronics Ltd. (BEL) jointly, and Dunlop is supplying the rubber pads for the tank 9s tracks. The Indian Government has also attempted to increase exports to offset the foreign exchange burden created by massive arms imports. Such efforts, however, are hampered by lack of inter- national marketing expertise and by restrictive provisions in licensing agreements: for example, India 9s export of MiG-21 spare parts to Egypt was prohibited by the Soviet Union. India has exported small arms and ammunition to Jordan, Lebanon, and Oman, as well as nonarmored vehicles to Malaysia and Nigeria. The notable foreign sale was the export in 1983 of eight Chetak helicopters to the Soviet Union. 2 India 9s Military-Industrial-Research Sector Central to India 9s military-industrial-research sec- tor are the nine defense firms and the government 9s Defense Research and Development Organization (DRDO). The defense firms are administered by the Ministry of Defense; all manufacture weapons and equipment for the armed forces as well as capital goods for the civilian sector. Many of these firms were established by the British during World War II, while others were located in the private sector and subsequently acquired by the government (see table lo-l). The largest state firm is Hindustan Aircraft Ltd., whose main aerospace production factories are located in Bangalore and Nasik. Another 10 facili- ties are spread throughout 6 Indian states. Bharat Electronics Ltd. (BEL) is the second largest defense firm. Sixty percent of its production (radio, radar, and electronics equipment) is for the cHi-Tech Players in a Dangerous of Far Eastern Review, June 9, 1988. Chapter 10--The Defense Industry of India q 155 Figure 10-3-Indian Major Conventional Weapon import Deals, by Type of Weapon, 1970-90 Aircraft 1 Misc. 3 SI 29 SOURCE: Office of Technology Assessment, from data in Stockholm International Peace Research Institute, SIPRI Yearbooks, 1970 through 1990, World Armaments and Disarmament. Figure 10-5-Indian Licensed Production of Major Conventional Weapons, by Type of Weapon, 1970-90 Armored vehicles 5 Helicopters 3 SOURCE: Office of Technology Assessment, from data in Stockholm International Peace Research Institute, SIPRI Yearbooks, 1970 through 1990, Worid Armaments and Disarmament. armed forces; the remaining 40 percent is destined for the civil market (TV broadcasting equipment and rminals). The third state-owned satellite receiver te defense company is Bharai Earth Movers Ltd. (BEML), whose products include transport trailers Figure 10-4-Indian Major Conventional Weapon import DeaLs, by Country of Origin, 1970-90 Soviet Union 46 United Kingdom 10 France 6 J United States 3 ~~ÿø Poland 2 ,,!..,.,,.,..... !,...,,.,,..,,!,., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .,.,.. !....,. 4 ...,..,..,.,! . . . . . . . . . . . . . . . . . . . . . . . .,, ..,..,, c c 9~{~$~ d d Others* 4 ~ c:::; r :;;: a Sweden West Germany SOURCE: Office of Technology Assessment, from data in Stockholm International Peace Research Institute, SIPRI Yearbooks, 1970 through 1990, World Armaments and Disarmament. Figure 10-6-Indian Licensed Production of Major Conventional Weapons, by Country of License Origin, 1970-90 Other* 3 q France 8 Czechoslovakia 1 Netherlands 1 Switzerland 1 SOURCE: Offioe of Technology Assessment, from data in Stockholm International Peace Research Institute, SIPRI Yearbooks, 1970 through 1990, World Armaments and Disarmament. and earth moving equipment. BEML is the largest exporter of the nine state-owned defense companies. India 9s naval sector consists of three shipyards: Magazon Docks Ltd. (MDL), Goa Shipyards, and 156 q Global Arms Trade Table 10-1 4lndian Defense Production, 1987-88 (1988 dollars, millions) Selected defense firms Production Profit before tax Exports Employment Hindustan Aeronautics . . . . . . . . . . . . . . . . . . . . . . . . . 546 31.0 0.09 43,833 Bharat Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328 24.0 0.80 19,266 Bharat Earth Movers. . . . . . . . . . . . . . . . . . . . . . . . . . . 431 40.035.12 16,151 Magazon Docks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 28.00.00 14,355 Goa Shipyards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 -.87 0.03 2,091 Garden Reach Shipyards . . . . . . . . . . . . . . . . . . . . . . . 63 3.77 0.00 10,427 Bharat Dynamics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323.00.00 1,798 Midhani . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 0.26 0.00 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,637124.9 36.04 109,428 SOURCE: Office of Technology Assessmen, 1991. Garden Reach Shipyards. Established in 1774 and acquired by the Ministry of Defense in 1960, MDL is India 9s preeminent shipyard, capable of building warships such as frigates and submarines, as well as cargo and passenger ships. At present approximately 60 percent of the yard 9s production is in the civil sector, specializing in ship repair, construction of off-shore oil platforms, and floating docks and cranes. Goa Shipyards Ltd. was acquired in 1964 and is a subsidiary of Magazon Docks. It specializes in ship repair and engineering work. Located in Cal- cutta, Garden Reach Shipyards is engaged primarily in ship repair and engineering activities, such as the manufacture of air compressors, turbine pumps, diesel engines, and generators. Two-thirds of its production is for the civil sector. Three relatively small defense firms are engaged in missile production, machine tool manufacturing, and the development of alloys. Bharat Dynamics, Ltd. has produced under license Aerospatiale 9s SS- 11-B1 antitank missile. Praya Tools, Ltd. manufac- tures machine tools as well as castings and forgings used in defense production. Mishra Dhata Nigam Ltd. (MDNL) was established in 1973 principally to reduce India 9s dependence on imported specialized metals (titanium and tungsten) and alloys for fabri- cating components for the nuclear and aerospace industries. It has received significant foreign assist- ance from France (Creuset Loire and Perchiney - Ugine Kuhlman) and from West Germany (Krupp). Unlike many other defense producers among the newly industrializing countries, India has invested heavily in its defense R&~ base to achieve greater self-sufficiency in defense production, and to reduce imports of foreign technologies. Under the Ministry of Defense, the Defense Research and Development Organization operates 42 major laboratories and employs 25,000 people, of whom 6,000 are scien- tists and engineers. The DRDO functions as a central coordinating agency for the execution of defense-related research (see figure 10-7). For example, it conducts research in the fields of aeronautics, combat vehicles, elec- tronics, naval science, metallurgy, and rockets and missiles. Expenditure on defense R&D as a percent of the total military budget remained relatively constant at approximately 2 percent until the late 1980s, when it jumped to 4.5 percent. This increase was necessary to support the design and develop- ment of India 9s most ambitious defense production programs: the Light Combat Aircraft and Helicopter projects; the Gas Turbine Engine project; and the Arjun main battle tank program. 3 Additional mili- tary research is conducted within each defense firm, and by the ordnance factories and universities. INDIGENOUS AND LICENSED DEFENSE PRODUCTION ACTIVITIES Naval In response to India 9s regional ambitions in the Indian Ocean, the mission of the Indian Navy changed significantly during the late 1970s. Accord- ing to one analyst: The original sea control/shore defense orienta- tion, which largely emphasized preserving the integ- rity of India 9s coastal waters against a Pakistani threat, has steadily given way to an assertive naval orientation . . . [The new strategic posture includes] . . . the defense of sea lanes and the preservation of Trends in India 9 Expenditure (New ABC Publishing House, 1988), p. 65 Chapter 10--The Defense Industry of India q 157 Figure 10-7 4Production of the Defense Research and Development Organization Others 9% Electronics A 11% A Combat vehicles 12% L Clothing, food 7 and Iubricants 13°/0 Armaments 55% SOURCE: Indian Ministry of Defense, 1989 Annua/ Report. zones of influence, where the emphasis has shifted from a specifically shoreline defense to a portman- teau conception labelled cdefense of the nation 9s maritime interests. This includes the defense of Jndia 9s coastline and seaborne trade as well as its broader economic and foreign policy interests in the Indian Ocean. To meet these new requirements, India has relied principally on weapon systems purchased from the Soviet Union and Western Europe. The acquisition of the British carrier, Viraat, formerly the HMS Hermes, has been complemented by an inventory of naval aircraft-Sea Harriers, Tu-142 maritime re- connaissance aircraft, and Dornier 228 light patrol aircraft as well as a number of antisubmarine warfare helicopters including Sea Kings and Ka-27s/25s. Some analysts believe that India is also seeking collaboration with European shipbuilding compa- nies to build a third aircraft carrier. India 9s shipbuilding facilities are also engaged in both licensed and indigenous production activities: MDL has produced frigates under British license and is producing Godavari frigates indigenously. The latter 3,000-ton frigate is the only ship of its kind in the world that can carry two helicopters and support antisubmarine warfare. MDL also is building two diesel-powered submarines under license from West Germany 9s Howaldtswerke Deutsche Werft Ag. (HDW). 5 India 9s naval fleet has been greatly ex- panded by recent deliveries of five Soviet Kashin II destroyers, eight Foxtrot and eight Kilo conven- tional sub marines, and one Charlie I nuclear- powered submarine. 6 (A 704-acre submarine dock- yard has been built with Soviet assistance at Vishakaputnam, headquarters of the Indian subma- rine fleet.) Garden Reach Shipyards has manufac- tured fast patrol craft and inshore patrol vessels for the Coast Guard. Some observers suggest that these new acquisitions will enable the Indian Navy to structure surface strike groups for offensive pur- poses, while the Navy 9s submarine force architec- ture will greatly enhance India 9s sea control and denial capabilities. 7 Armor Although India successfully manufactured the Vijayanta (a modified Chieftain tank) under British license, its indigenous design and production of a main battle tank has been delayed. Initiated in 1980 by the DRDO 9S Combat Vehicle Development Establishment, the Arjun main battle tank is still in the development phase because of problems related to its power plant. The power plant remains under development at the Gas Turbine Research Establish- ment. Delays in this program led to the Defense Ministry 9s decision to license-produce the Soviet T-72 tank as an interim measure. Missiles The DRDO, and its Defense R&D Laboratory (DRDL) have made steady progress in India 9s ballistic missile program. The DRDO has produced and tested the long-range surface-to-air missile Akash, the surface-to-surface missile Prithvi, which has a range of 150 miles and can carry a nuclear payload, the surface-to-air missile Trishul, and the most advanced antitank missile, Nag. However, the apex of the DRDO 9S missile program has been the development of a new generation of long-range, surface-to-air missiles called Agni. With the Agni 9s J. cIndia 9s Naval Reflections on History and Strategy, d Comparative Strategy, vol. 6, No. 2, 1987, pp. 192-193. North African and South Navies, d U.S. Naval Institute Proceedings, vol. 3, No. 3, March 1985. op. cit., 4, p. 204. 158 q Global Arms Trade successful May 1989 test flight, India became the first developing nation to design and produce an intermediate-range ballistic missile derived from civilian space activities. 8 The Agni carries a l-ton payload and is capable of reaching China 9s southern cities; carrying a half-ton atomic bomb, this missile could hit Beijing (2,200 miles). The Agni program benefited substantially from foreign technical assist- ance to its sister space program. West Germany provided three indispensable missile technologies: guidance, rocket testing, and composite material handling and fabrication. 9 Aerospace While Hindustan Aircraft Ltd. (HAL) success- fully produced the British Aerospace Gnat fighter and its trainer version, Ajeet, as well as the HS-748 military/commercial transport aircraft, its attempts to design and produce indigenous supersonic com- bat aircraft have failed. One example was the development of the HF-24 Marut fighter during the late 1950s and 1960s. HAL designed and eventually fabricated the airframe but neglected to develop a suitably advanced engine. By the time an imported engine (a MiG- 19 Vk-7) was modified and fitted, the plane was technologically obsolete. India has been forced to abandon its policy of self-reliance in defense production because design or production problems frequently resulted in the cancellation of projects (Ajeet), and because of the lack of engineer- ing and quality control expertise. l0 India increas- ingly has relied on licensed production and outright procurement of foreign weapons systems. As one Indian defense scientist quipped, cEvery time we need to develop a better mousetrap, the country has to import a better cat. d 11 Strong Indo-Soviet military cooperation has de- veloped in the wake of India 9s failed policy of self-reliance in defense production. India is the only country outside the Warsaw Pact to license-produce Soviet aircraft, and it has gained considerable experience in the manufacture of the MiG-21/-2l bis, and the MiG-27. HAL will shortly produce MiG-29 Fulcrums. Beg inning in the early 1970s, HAL wanted to diversify and looked to West European aircraft companies to license-produce an advanced fighter and to transfer the technologies related to their materials and components. Of the possibilities-the French Mirage 2000, the Swedish Viggen, and the Anglo-French Jaguar, the latter was chosen in 1978. Though HAL has assembled two-thirds of the 116 fighter aircraft, attempts to indigenize component production have been frustrated. One of the major problems is the preference by the Indian armed forces to purchase weapon systems from abroad. In an important departure from its role as an assembler of foreign-made aircraft, HAL, with the DRDO, has embarked on an ambitious program to design, develop, and produce a combat aircraft for the Indian Air Force (IAF) requirements of the 1990s. The Light Combat Aircraft (LCA) project is receiving considerable design and technical assist- ance from U.S. and European companies. General Electric has supplied seven F404 engines to power the LCA prototypes. These engines are eventually to be replaced by the indigenously designed and manufactured GTX-35 gas turbine engine. Various U.S. companies-Allied-Signal, Litton, and Honey- well-are bidding to provide the LCA 9S flight control and other electronic systems. The U.S. Air Force reportedly will provide training, consulting, and test facilities. 12 Finally, HAL, in partnership with Messerschmitt-Bolkow-Blohm in Germany, is in the development phase of an Advanced Light Helicopter program, which will complement the IAF 9s squadrons of Chetak (Alouette III), and Cheetah (Lama) helicopters. 13 U.S. responsiveness to India 9s requests for tech- nology transfers and supplies of critical components for the LCA project marks a significant departure from the previously strained Indo-American rela- tionship. Some observers believe that if the United Missile Developed, d Weekly, July 17,1987, p. 10, and Richard M. cIndiaTests Mid-Range Missile, d The Washington Post, May 23, 1989, pp. Al, A21. a thorough account of West Germany 9s participation in India 9s ballistic missile see Gary cIndia 9s Missiles-With a Help From Our Friends, d The Bulletin of Atomic Scientists, vol. 45, No. 9, November 1989, pp. 31-35. with various defense company Defense Review, 19, No. 4, P. Anthony, cThe Trade in Major Conventional Weapons, c in Stockholm Peace Research Institute, Yearbook 1989, Armaments and Disarmament (Oxford: Oxford University Press, 1989), p. 212. Asia pacific Asia-Pacific, VO 1. 2, 1989, p. Chapter 10-The Defense Industry of India . 159 States establishes a firm foothold in India 9s defense Soviet Union. The Soviet Union has sought to production program, it may achieve the twin objec- counter this challenge to its strong defense relation- tives of extending U.S. influence and providing ship with India by offering to integrate the LCA 9S export opportunities for American defense compa- characteristics into the yet undeveloped MiG-35 nies, while reducing India 9s dependence on the aircraft.

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