Why India is a major new market for military space systemsby Kiran Krishnan Nair
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| Space capabilities, particularly those related to reconnaissance, communication, and navigation, that enable militaries to perform their tasks optimally are inherent to any military modernization. |
The military significance is apparent given that the military center of gravity, in economic terms, has already shifted to India. According to the Stockholm International Peace Research Institute report of 2014, India accounted for 14 percent of the world’s arms imports from 2009 through 2013, more than any nation. The trend would continue into the next few decades as the India continues its modernization drive amidst a troubled and violent environment at home and in its neighborhood. The security scenario is not expected to improve anytime in the near future, India’s arms industry is yet to mature, and India’s economy is expected to continue booming with growth rates in gross domestic product that exceed the global average. Put briefly, India’s rising security needs would continue to be supported by a growing economy and the vortex of economy for the defense market would continue to be India. The potential value of Modi and Obama extending the US-India defense cooperation agreement until 2025 thus is pretty impressive.
A buyer’s market beckons, and arms sellers from across the world are already in India in a big way. However, most deals are related to conventional arms like military aircraft and ships. The competition is intense, and big bucks are being made. However, one needs to look beyond the conventional. It is here that space technology fits in. Space capabilities, particularly those related to reconnaissance, communication, and navigation, that enable militaries to perform their tasks optimally are inherent to any military modernization. They enable long distance communication, cross-border observation, precise delivery of firepower, personnel, relief material, and so on.
Apart from the military, space also affects other security agencies like the federal and state police forces, intelligence, and narcotics control, all of whom abound in India and all of whom aspire to put space to multifarious uses. For instance, observation satellites enable precise identification of cocaine plantations even in deep forest cover, making interdiction work so much easier. To put their potential demand in perspective, India has a massive standing army of over 1.5 million, another 1.5 million in paramilitary forces, and an even larger number of state police, all of whom covet space capabilities. All security modernization gravitates to space, and the acquisition and integration of space capabilities is an inherently costly affair involving lots of money.
India’s handicap lies in its patently civil space program that has civil origins and, unlike most other major spacefaring nations, is focused only on civil uses. Thus, India’s space capabilities are severely limited in their security applications. The glaring military vacuum is evidenced in the fact that though India has constellations of communication and observation satellites, it has only one dedicated military satellite. Apparently, civil use of space by India’s millions leaves few resources for its security applications. A shift of focus from civilian development to military uses is neither prudent nor affordable and hence not likely. At least none is expected in the foreseeable future. On the other hand, the US is the acknowledged global leader in space capabilities, both of a civilian and military nature. In the civilian domain, a US-India Joint Working Group on civil space cooperation, formed in 2004, pursues the acquisition of civil capabilities; however, no such arrangement exists for defense products.
| India does seek to indigenize products and services. However, in a technology-intensive area like space, this is easier said than done. Space products are a result of long-term research and development and time in this case is no longer available. |
The vacuum thus lends itself to commercial opportunity. This is especially so in view of the extension of the defense cooperation pact until 2025. With no local industry, there exists little option for India apart from tapping into the foreign space industry. India’s space agency already has an excellent interface with private industry that provides a variety of products. The relation is likely to grow as both budgetary allocations and the needs rise. Funding has not fallen in the past decade and are is likely to decline in the next, as evidenced by an increased outlay in the twelfth five-year plan (2013–2018) of 400 billion rupees, or roughly US$6.5 billion.
Equally or perhaps even more significant is the fact that close to one-third of these allocations will flow into the industry. That is only expected to increase to surge as the space demands expand beyond civil to military applications. As it is, the 2013–14 figures of a combined defense and space budget are impressive at over $40 billion. As modernization gathers pace and aircraft, ships, and other items come in, the demand for space capabilities would rise proportionately. Integrating these capabilities into military systems is complex and needs support by industries with established competencies and experience. As of now, no Indian industry is known to have these, and hence the mantle falls on foreign providers. The harvest is ripe considering that in year 2014, the foreign investment limit has been raised from 26 to 49 percent. As it is, foreign imports constitute more than two-thirds of India’s total procurement and as the nascent Indian defense industry opens up, the opportunities rise aplenty.
India does seek to indigenize products and services. However, in a technology-intensive area like space, this is easier said than done. Space products are a result of long-term research and development and time in this case is no longer available: the modern military equipment is already arriving, but the supporting space systems are yet to come in. It is here that India’s new Defense Procurement Policy (DPP) of 2013 provides recourse. It encourages Indian companies to collaborate with foreign companies to obtain products not available locally. The Indian defense industry makes no space products. The DPP, in effect opens new vistas for the Indian defense industry to reorient business strategies and collaborate with foreign firms for space products. Joint ventures to tap into the burgeoning Indian market thus make enormous sense.
This sense is accentuated by the fact that as part of its drive to encourage foreign investment and manufacture of defense products, India has cleared 19 defense sector projects since September that were pending for last several years. Defense deals worth over $6 billion have also been cleared in the past three months. New vistas have opened up and the harvest is ripe. The opportunity is also not fleeting: it would last decades. The potential exists, the heads of nations concur, the defense pact presents an opportunity and there is but little reason for either party to not explore the sense and sensibility of the opportunity.
