Need for an Indo-French Military-Industrial Partnership Framework

Earlier this month, India entered into deal worth 375 million USD with the Philippines for sale of the BrahMos supersonic cruise missile. This is set to be the first major defense sale of indigenously produced equipment by India. This event should not be viewed in isolation, but in the context of the power dynamics unfolding in the Indo-Pacific over the last few years. Apart from the Philippines being currently embroiled in a major dispute with China over territoriality in the South China Sea, India itself has been at loggerheads with China in our northern frontiers, most notably Eastern Ladakh.

Coincidentally, the Indo-Philippines deal closely follows another deal concluded in September last year: AUKUS. The AUKUS is a trilateral security pact between Australia, the United Kingdom and the United States for the Indo-Pacific region. Under AUKUS, the US and the UK will support Australia in its acquisition of nuclear-powered submarines. This deal caused a major fallout between the English-speaking countries (US, UK, Australia) and France, as the Foreign Minister of France openly called the pact “a stab in the pact” following Australia's simultaneous cancellation of the proposed French-Australian submarine deal worth 56 billion Euro. What is noteworthy for India, though, is that immediately after this incident, the French Prime Minister Emmanuel Macron reached out to Indian Prime Minister Narandra Modi, promising “commitment to the strengthening of India's strategic autonomy, including its industry and technology base, as part of a close relationship based on trust and mutual respect."

The significance of the Indo-Pacific region for France could be gauged from the fact that 93% of its exclusive economic zone (EEZ) is located in the Indian and Pacific Oceans. The region houses 1.5 million French people besides 8,000 soldiers. In the France imagination, the region’s geographic significance is rooted in multiple territories, including Reunion Island, Mayotte, New Caledonia, French Polynesia, Wallis and Futuna, Clipperton Island and the French Southern and Antarctic Lands.

Given this convergence of interests of India and France, and in the immediate context of the impetus received by Make in India after the Indo-Philippines BrahMos deal, India should immediately leverage its ties with France to further boost domestic defence production, targeting domestic military supplies as well as exports.

India already possesses a large defence research and manufacturing ecosystem. However, the Defense Research and Development Organization (DRDO) has failed to break into the global defense market as a supplier. Furthermore, India’s domestic defense industry has fallen short of meeting the supply requirements of our own forces. Although India produced Asia’s first indigenous jet fighter in the 1960s, its defence continues to be heavily reliant on imports especially from Russia and Israel. Recently, the government has emphasized domestic defense research and manufacturing besides exports, and India has set itself an ambitious target of 5 billion USD in exports by 2025. This has been accompanied by an emphasis on private sector participation in this industry.

The increase in the FDI threshold from 49% to 74% is focused on creating a strong defence industrial base with domestication of transferred technologies and export of manufactured goods. The Department of Defence Production has been at the forefront of this project. To achieve its desired outcomes, the Ministries of Defence, Commerce and Industry, and External Affairs need to synergize their operations and implement a comprehensive defence export policy, respecting the intergovernmental regime in the trade of arms. Since 2020, India has already exported assault rifles and helicopters (Dhur light helicopters) to Nepal, Mauritius and Maldives. The latest deal with the Philippines is a landmark moment in this context. Indonesia and Vietnam are two other potential partners in the Indo-Pacific who could be supplied Indian-made defence equipment.

However, the systemic inefficiencies which continue to plague the Indian defence research and manufacturing sector might prove to be a roadblock in India’s path to achieving its 2025 target of 5 billion USD exports. Here, France, which has recently proven its interest in deepening defence ties with India with the sealing of the Rafale deal, could be the greatest economic partner. India, in one of the biggest ever defence deals, recently purchased 36 multirole fighter aircrafts (Rafale) for 7.87 billion Euro from France's Dassault Aviation.

French companies could find India to be a convenient manufacturing hub because of:

1. India’s liberalized economy;

2. Existing skill base and technological ecosystem;

3. Major cities in India (eg. Hyderabad, Bangalore, Nagpur) setting up Special Economic Zones which could be used by French defence manufacturers;

4. The high quantum of equipment produced in the production lines hence making the enterprise profitable;

5. The strategic location of India bang in the middle of the Indo-Pacific, the region where most of the potential buyer-nations exist.

6. Competitive unit cost of production, given the lower overall cost of factors of production.

Already, two major French-origin companies, Dassault Aviation and Naval Group, have established themselves in Nagpur and Mumbai respectively. Naval Group was one of the shortlisted original equipment manufacturers (OEM) for the P75(I) program based on Expression Of Interest (EoI) in 2019 and “its result confirmed by Indian government in early 2020”. Naval Group has long enjoyed a partnership with Mazagaon Dock (MDL) and Indian Navy in the operationalization of the P75 Scorpene submarines, besides P28, Anti-Submarine Warfare corvettes, and AIP developed with NMRL/ DRDO.

At the political level, the French and Indian defence ministers met in Delhi last month for the third annual defence dialogue. Defense industrial collaboration was the main item on the agenda. Rajnath Singh reportedly told his counterpart Florence Parly that either the French companies should “collaborate with Indian companies or simply produce in India.” Parly expressed France’s readiness to assist India in procuring additional Rafale fighter jets while helping India strengthen its Make in India initiative by facilitating the inclusion of Indian manufacturers in global supply chains. Parly further stated that “We are ready to answer any additional needs or requests that could be made by India. We know that an aircraft carrier will soon be delivered. Aircraft are needed.”

INS Vikrant, India’s indigenously built aircraft, is to be commissioned by August 2022. Once commissioned, the carrier will be the second in active operations with the Indian Navy, the first being the Russian-built INS Vikramaditya. Given the fact that the navy is one domain where India is seen as having an edge over China, a few military analysts have recently compared the capabilities of INS Vikrant with those of Chinese aircraft carriers, Liaoning and Shandong. Some, like H.I. Sutton, have argued that INS Vikrant is superior to the Chinese carriers. Given this possible edge India has over China, it needs to maintain the momentum in (1) Defence Upgradation & Technology Indigenization (2) Interoperability and Complementarity between Indian and foreign (especially French) equipment which would (like Rafale fighter jets) be populating Indian carriers.

The recent confrontations India has had with China only demonstrates the need to augment our defence infrastructure and technological preparedness to deter further Chinese belligerence. Hence, alongside economic partnerships with counterbalancing Indo-Pacific nations, India needs concrete military-industrial cooperation with nations which have strategic interests in the region. Here, few countries align so well with us as France. Even at the political level, India and France are democracies. While India is the largest democracy in the world, France, with its founding ideals of Liberty, Equality and Fraternity, was the fountainhead of modern liberal democracy. India and the United States today share a comprehensive global partnership and India has been accorded the status of a Major Defence Partner by the US. while a similar comprehensive framework is lacking between India and France, although de facto cooperation has been growing leaps and bounds in domains ranging from the solar alliance to fighter jets. To derive maximum returns from this relationship, India needs to urgently upgrade its military-industrial relationship with France to something similar to that which it shares with the US.

The Ministries of Defence, Commerce & industry, and External Affairs need to move towards consolidation of the exiting state of Indo-French relations into a formal policy framework for military-industrial cooperation between these two democratic states.