Page 12 - The Indian EYE 011422

OpINION JANUARY 14, 2022 | The Indian Eye 12

Vietnam. Thailand has shown a re- in this segment, not only will India
solve to upgrade its arsenal with the be equipped to host more Original
10-year “Modernization Plan: Vision Equipment Manufacturers (OEMs)
2026” adopted in 2017. However, its for manufacturing in India, but also
defense purchases have been mired provide a resilient and reliable sup-
in controversies around questions of ply chain for large-scale production
strategic relevance and high expense. in aerospace and defense sector.
For instance, the three diesel-electric
submarines (valued US$ 1.03 billion) PoliCy oPTions
that Thailand has decided to buy Policymakers may like to focus
from China are unsuitable to be op- exclusively on attracting investment
erated in its own coastal zones due to for intermediate goods industry. A
large size. Although the government starting point can be encouraging
seems determined to procure more, foreign OEMs to discharge offset ob-
internal corruption in Thailand’s de- ligations by investing in these indus-
fense ecosystem may affect the deci- tries. A thriving intermediate goods
sion-making process.
industry will achieve three-pronged
objectives of sufficient supply to local-
inTErMEdiaTE Goods ly operating OEMs, export to foreign
MarKET BrahMos is one of the best missiles made by India with Russian collaboration (ANI) markets, and incentivize more foreign
Even though China’s not-so- OEMs to set shop in India. While it is
peaceful military and economic rise ideal for India to increase number of
defense production units that deliver
factors strongly into the trend of de- ‘final goods’ like finished aircraft, it
fense spending in the region, some may be difficult feat to achieve given
analysts believe that there are other many structural constraints. Allowing
formidable reasons as well. Much of ‘intermediate goods’ industry to flour-
the defense budgets of ASEAN coun- ish will naturally attract more foreign
tries is spent in maintaining large OEMs that can eventually deliver fi-
armies and old arsenals, and threats nal goods and strengthen India’s de-
of piracy, illegal fishing, smuggling, fense exports.
etc., pull their own share from these In this scenario, it may be im-
already constrained budgets. As a portant to foster dialogue among
consequence of limited spending in potential investors, entrepreneurs
Research & Development and lack in the aerospace and defense sec-
of infrastructure for defense manu- tor, and policymakers. Think tanks
facturing, import of arms is the most and advocacy groups can bring these
suitable choice for many ASEAN na- parties together to reach consensus
tions. on the road ahead. Since the restruc-
There is considerable realization
of this handicap in all major ASEAN Indian Air Force (IAF) Tejas aircraft demonstrates its skills in turing of supply chains is happening
now, inaction at this time could mean
capitals, and governments aim to the biennial Dubai Airshow 2021 (ANI) losing out to aptly-located other sup-
keep importing vital defense items pliers that will eventually emerge in
while at the same time enhance in- the global market. India has the ad-
digenous capabilities. This means india in ThE Mix (MP-IDSA) and US-India Business vantage of a political class that is in-
Southeast Asia will continue to be India aspires to radically boost Council (USIBC) in October 2021, terested in boosting defense exports,
an attractive market for finished de- its indigenous defense industry and a key takeaway was to boost Indian creating infrastructure for large-scale
fense products as well as intermedi- become a major exporter. The Indi- manufacturers of defense interme- production, and addressing issues
ate products. an government has also encouraged diate goods. Major industry players faced by private players involved in
For instance, Indonesia passed a foreign players to manufacture in such as Lockheed Martin and Boe-
law in 2012 requiring its armed forces India. Defense Minister Rajnath ing India expressed that fulfilling the sector. It must make use of this
window of opportunity.
to acquire arms domestically as much Singh has set goals of US$ 25 billion requirements of Indigenous Content
as possible. PT Pindad, PT Digantara of domestic defense production and (IC) becomes difficult due to lack of Akash Sahu is a Research Analyst with
Indonesia, PT PAL Indonesia and US$ 5 billion of defense exports for forthcoming Indian companies in- the Centre for Southeast Asia and Oce-
PT Dahana are some state-owned India. Naturally, Southeast Asia is a volved in production of intermediate ania at Manohar Parrikar Institute for
Indonesian companies that are in- lucrative market for India’s defense goods. As a consequence, much of Defense Studies and Analyses (MP-ID-
volved in production of naval ves- exports given the cordial relations these items are imported. On similar SA), New Delhi.
sels, propeller aircraft, helicopters, with ASEAN partners, and growing lines, India’s dependence on inter- Views expressed are of the author and
explosives, artillery and land combat political alignment over issues of in- mediate goods from foreign nations do not necessarily reflect the views of
vehicles. Similarly, Malaysia’s Boust- ternational importance. Apart from limits its autonomy to export defense the Manohar Parrikar IDSA or of the
ed Heavy Industries is working with aiming to deliver high-end strategic products abroad. Asia-Pacific is like- Government of India.
French DCNS to build six coastal assets in the region, India may also ex- ly to witness substantial growth in
combat ships for Malaysian Navy. ploit the promising segment of inter- aerospace and defense sector, and This is the abridged version of the
Singapore’s state-owned ST Engi- mediate goods in the defense sector. the demand for titanium and alloys, article which appeared first in the
neering has sold arms to a number In a roundtable discussion on de- aluminum and alloys, steel and al- Comment section of the website (www.
of countries including armored troop fense industry cooperation organized loys, and composites will drive the in- idsa.in) of Manohar Parrikar Institute
carriers to Britain under a deal in jointly by Manohar Parrikar Institute termediate goods market for a long for Defense Studies and Analyses, New
2008. for Defense Studies and Analyses time. By investing to build a base Delhi on January 3, 2022

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