These are the difficult times for Russia as it no longer finds itself as singularly favored as it once used to some years ago in milking the lucrative Indian defense market.
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These are the difficult times for Russia as it no longer finds itself as singularly favored as it once used to some years ago in milking the lucrative Indian defense market. And yet the Russians are the best bet for India when it comes to defense procurement.
Here are the glass half-full and glass half-empty pictures for Russia when it comes to doing business with the new-look of the Indian defense sector. The Down Side On the down side, there can be three strong undercurrents which stack up against Russia. One, Russia still continues to be the single largest defense vendor for the Indian industry and is responsible for over 60 percent of Indian weaponry currently in use by India – a situation that a resurgent India and its military establishment are not happy with and are showing signs of change, much to the chagrin of the Russians. Two, the Russian defense exports market is shrinking. The Russia-China defense relationship is not in good shape because of various reasons, particularly the fact that the Russian defense imports are no longer welcome by the Chinese. India, on the contrary, remains one of the biggest purchasers of Russian arms purchasers in the world today. The figures speak for themselves. Even in these hard times of a declining Indo-Russian defense partnership, India accounted for some 25 percent of Russia’s arms sales revenue. In the year 2011 alone, India spent $3.3 billion on Russian arms. Though the Indian defense procurement policy is rapidly being kept abreast to meet contemporary challenges with a sharply-increased focus on self-reliance as demonstrated by the latest policy changes announced by the Indian defense establishment on June 1, 2013, the political bosses in New Delhi are well sensitized to keep Russia in good humor. According to the new Defense Procurement Procedure-2013, unveiled by the Indian defense ministry on June 1, 2013, the requirement of the prescribed indigenous content, that is 30% in the Buy (Indian) category, is to be achieved on the overall cost basis, as well as in the core components like the basic equipment, manufacturers recommended spares, special tools and test equipment taken together. In addition, the basic equipment must also have minimum 30% indigenous content at all stages including the one offered at the trial stage. It has further been stipulated that an indigenization plan will be provided by the vendor. Three, the Russians have of late faced cut-throat competition from the West and even from a small state like Israel in eating into the rapidly-shrinking and competitive Indian defense market. Till a few years ago, it was a rarity for India to buy American defense equipment. But this situation has changed drastically, much to the discomfiture of the Russians. The Up Side Simultaneously, there are three very good reasons as to why the Russians are still the best bet for India in defense procurements and why it is a win-win situation for India and Russia to continue their age-old partnership on defense and strategic issues. First of all, the Russians have an established track record of supporting its friends to the hilt. The biggest contemporary example is Syria. Russia has sent a loud and clear message through the current Syrian crisis that it will stand by its allies, whatever it takes. This is a husband-like virtue which all states appreciate, cutting across their ideological tilts. In the ongoing Syrian crisis, Russia has demonstrated to everybody that it firmly stands by its proclaimed friends, even when they are in a snake pit. Therefore, it becomes a Russian USP for selling its armaments. The message is unmistakable: that Russia will stand by you even if you are in the midst of the worst rough and tumble diplomatically. No country can better vouch for this than India! |
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