Economic Highlights

New Delhi, 17 July 2023

France Gets Modi Booster

INDIA EXPORTS BRAHMOS, PINAKA

By Shivaji Sarkar 

India’s global arms sales may get a boost with deals with France, which has given rare honours to India by according the highest civilian award, Grand Cross of the Legion, to Prime Minister Narendra Modi. It is a deep commitment for furthering the relationship in times of global crisis. 

After having given a boost to the US economy and President Joe Biden in an election year, the Indian deal is a great booster for the French and European economy. Indian civil aviation sector buys 250 Airbus aircraft that are manufactured and assembled in a number of European countries with France being the anchor. There are 210 single aisle Airbus 320 and 40 twin-aisle Airbus 350 for flights to the US. French President Emanuel Macron hailed the deal. 

Interestingly enough with the heavy purchases from the US and France, India is not becoming an importing economy. With technology infusion India’s defence productions touch Rs 1 trillion, exports zoom and its products are having markets in 85 emerging areas. Some super missiles like Brahmos have become the leader in the exports market. French aircraft and submarines to be jointly produced in India may lead to strategic sales adding to India’s might not just as an arms user but also as an arms producer.France notably is the second largest arms supplier to India after Russia. France’s strategic partnership extends to space launches and anti-terror activities. 

India is being seen as a key country that is helping France during a crisis engulfing Europe and the West. The IndianNavy will have special version of Rafale planes and Scorpene submarines that would add to India’s strength in the blue waters. Scorpene is later to be built at the public sector Mazgaon docks. It involves technology transfer and shall gradually build up India’s manufacturing strength. The two deals would benefit France by Euro 9 billion or Rs 80000 crore. It will create enormous number of jobs in France, some other European countries as also in India.The prices so far are indicative. Firm deals would be made as details are worked out, though it may take some time. The civilian aircraft deal is to give a major boost the French aviation industry. 

Prime Minister Modi forcefully asked France to support its cause for enabling India to speak for the world by supporting India’s bid for permanent membership of the UN Security Council. It is as per global strategy to create a counter force capable of intervening in the Indian Ocean and Far Eastern affairs. More than a defence deal, it aims at changing the contours of global security and economic activities. 

The proposed inter-governmental agreement for the Rafale-M fighters will include off-the-shelf purchase of 22 single-seat jets and four twin-set trainers. It would include associated equipment, weapons, simulator spares, crew training and logistic support. This is likely to cost Rs 50000 crore. The jet deliveries would begin in three years. 

The three new Scorpene subs would be using DRDO produced air-independent propulsion (AIP), to be manufactured at Mumbai’s Mazgaon Docks. It will cost around Rs 30000 crore. The first new submarine is to be rolled out in collaboration with French M/s Naval Group for Rs 23000 crore under Project 75. The project was inked in 2005 by the UPA government. But it was hit by time and cost overruns. The sixth sub is to be delivered in 2024 and would also be retrofitted with AIP. 

Rafale-M has emerged as the front runner replacing the US made F/A-18 Super Hornet. It was approved by the navy after stringent trials.It may be recalled that Rafale was to be manufactured by Anil Ambani’s Reliance. The company, however, has gone bankrupt and so far the project has not seen the light of day. How this would come up would be interesting to watch. Perhaps ultimately this too might go toHindustan Aeronautics Limited(HAL), which has produced different types of aircraft right from Ajeet to Sukhoi. 

The navy deals are as per dreams of India to spread its wings in different parts of the world to ensure navigation freedom. It is for peace and prosperity of the global south, says Modi. India’s commitment for multilateral action is deep-rooted in the wake of Covid-19 and Russia-Ukraine conflict. 

India is no more just an importing nation as it exports arms now. India has surpassed Rs 1 trillion ($ 12 billion) in defence production in 2022-23, 12 percent annual growth, considered significant for self-reliance and indigenisation. Over the past nine years expenditure on defence procurement from foreign sources hasconsciously been reduced from 46 percent of expenses in 2018-19 to 36.7 percent. 

After getting an order from The Philippines recently, India is in talks with as many as eight countries for exporting the Brahmos missiles. These are friendly nations located in South-East Asia, Middle East and even Africa, according to Atul Rane, CEO and MD of Brahmos Aerospace, an Indo-Russian joint venture. 

During 2022-23, India exported Rs 16000 crore defence produce to 85 countries. In 2013-14, it was Rs 686 crore, 23-fold increase. About 100 firms are engaged in producing defence wares. There is a paradigm shift. Defence equipment of different kinds is being produced and has found a market for it. Notable exports are Dornier 228 aircraft, artillery guns, PINAKA rockets and launchers, radars, simulators, and armoured vehicles. Such exports also create strategic relationships.   

French engine maker Safran is also in the running to expand a venture with HAL for making engines for army helicopters. Much of this new manufacturing is likely to turn out as ventures for future exports. 

India's defence exports increased by 24 percent from a year ago but it is still 54 percent short of achieving the 2025 goal of Rs 35,000 crore. The country also remains the largest importer of defence equipment, and its share in global arms exports needs to grow. It is a beginning and continuously each year the external sales are increasing. 

The new paradigm if sustained properly may create a space for India’s defence wares in the global market with strategic partnerships with nations advanced in technologies. A new kind of ‘Make in India’ may change the global market.---INFA 

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