 "World's biggest arms importer, India wants to buy local")
The confident and sexy display reflected Russia's longtime position as India's dominant military provider but decades of effort by India to make its own hardware might finally be bearing fruit. India recently rolled out its own fighter jet, a tank, a mobile howitzer and a host of locally made ships.
If India succeeds, the Russians could be in trouble. Russia has nearly $39 billion worth of military equipment on order by India, representing nearly a third of Russia's total arms exports.
Defence Minister A K Antony said at a news conference during the exposition that the country's reliance on foreign arms makers must end. "A growing India still depending on foreign companies for a substantial part of our defence needs is not a happy situation," he said.
Analysts sceptical
Whether India can break its import addiction is anyone's guess but many arms analysts are sceptical. India is expected to spend about $11 billion this year buying weapons from abroad, despite decades of effort by the government to create a domestic military manufacturing sector.
"I don't think there's another country in the world that has tried as hard as India to make weapons and failed as thoroughly," said Pieter D Wezeman, a senior researcher at the Stockholm International Peace Research Institute, which studies global security.
Wezeman said he was sceptical that India's new products would change that history, saying its fighters, tanks and guns were "of questionable quality".
India ranks eighth in the world in military spending. Among the top 10 weapons buyers, only Saudi Arabia has a less productive homegrown military industry. China, by contrast, has been so effective that it is beginning to export higher-technology arms.
In one telling example, India could buy fully assembled Russian Sukhoi fighters for about $55 million each but instead mostly relies on kits that are sent to the government-owned Hindustan Aeronautics Ltd, which assembles them at a cost of about $68 million each - nearly a quarter more. In another example, government labs spent billions trying to develop an aircraft engine, only to abandon the effort and buy engines from General Electric for the recently introduced fighter, the Tejas.
"While it's more complicated assembling Sukhois than putting together an Ikea flat-pack, it's not that hard," said Samuel Perlo-Freeman, a programme director at the Stockholm institute. "And it's far from an independent and autonomous development of a new weapons system."
India has tried to encourage private companies to make arms in India, both in partnerships to the government and independently, but few of these efforts have succeeded. Most of India's homegrown arms are developed in 50 government labs and built at eight large government factories and 40 government ordnance factories.
Companies have mostly been unwilling to work with the government and the government has not allowed foreign makers to own more than 26 per cent of any Indian factory. It has agreed to raise that limit to 49 per cent but no company has applied for the exception.
Antony dismissed criticisms of the government's chokehold on arms production. "Indian scientists and Indian industry are more efficient and the government will have to support them," he said.
Govt needs to get out
But Joshi said India's government needed to get out of manufacturing. "Our defence industrial base is hopelessly out of date," he said. "It needs to be dismantled and handed over to the private sector."
That has left the door open for countries such as Russia, which saw record arms deliveries to India in 2012, the most recent year for which figures are available, rising by half from 2011.
In the previous five years, India bought 12 per cent of the world's arms imports and Russia accounted for 79 per cent of India's deliveries, according to the Stockholm institute. American manufacturers have recently won several orders for transport and maritime patrol aircraft, displacing some Russian equipment, but the Russians are still by far India's dominant arms supplier. In 2012, Russia delivered to India the second nuclear-powered submarine ever exported by any country.
Alexander Kadakin, Russia's ambassador to India, dismissed any notion of a slowdown in sales to India. "It is inappropriate in my view and even incorrect to speak about Russia allegedly losing its leading positions in the Indian market," he told an exposition publication.
Because of poor infrastructure, stultifying labour rules and difficulties acquiring real estate, making anything in India is hard. The country's manufacturing sector is declining and now represents 13 per cent of the total economy - about the same share as in the US.
But its military and civil aviation markets are so enticing that major manufacturers are opening facilities in the country anyway. In 2010, Sikorsky Aircraft, part of the American conglomerate United Technologies, opened a plant in Hyderabad that it operates jointly with Tata Advanced Systems. The facility assembles the cabin for its midsize helicopter, the S-92. The helicopter's cabin was previously made at a Mitsubishi facility in Japan.
Despite high costs
Production was transferred to India not because costs were lower (surprisingly, they were not) but because having a local facility might encourage sales in India, said Ashish Saraf, program manager for the Tata-Sikorsky joint venture, of which Sikorsky owns 26 per cent.
But the challenges have been immense. New roads had to be built to the venture's 11-acre site and they came slowly. The company had to build its own facilities to treat water, handle sewage and harvest rainwater. It eventually got power from the state but operated initially from six backup generators, which must be kept operational for occasional power cuts.
Employees needed considerable training in aerospace manufacturing and in the early days often left for higher-paying jobs as soon as their training was complete. "Our talent got poached all the time," Saraf said. So, in addition to expensive training, the company had to undertake an employee retention programme.
Shipping has been a challenge. Some of the Tata-Sikorsky plant's most important equipment was damaged on the trip from the port in Mumbai by India's terrible roads, delaying production. The plant sends its helicopter cabins back to the port; from there, they are shipped to Pennsylvania, where the aircraft are fully assembled.
To safeguard against damage to the cabins, the company has hired the operator of a fleet of specially made suspension trucks that travel more slowly, at less than 30 miles an hour (48 kmph), and never at night. As a result, the 450-mile (724-km) journey takes five days. At least two people are needed for each journey, since one must repeatedly get out with a long stick to push low-slung electrical wires up and out of the way of the truck.
"Our early expenses were very high, as we were breaking ground in almost every area we wanted services - internet, phone, water, sewage, electricity. Everything," Saraf said. "The challenges continue in terms of logistics and transport."
To encourage local manufacturing, India now requires private foreign arms companies to undertake at least a third of their manufacturing in India, as measured by the value of the weapons. But because of the difficulties in making high-technology equipment in India, billions of dollars' worth of products from these so-called offsets have been piling up unused.
A $16-billion deal to sell 126 Rafale fighters from the French aircraft maker Dassault Aviation has been in limbo for years, in part because the French have balked at India's manufacturing requirements. With India's economy struggling, expensive purchases such as the Rafale might no longer be feasible anyway, said Ajai Shukla, defence consulting editor at Business Standard.
"We are at a watershed moment, because we cannot afford to keep importing every piece of equipment we need," Shukla said. "We have just produced a fighter, a tank and a range of warships. For the first time, India can realistically indigenise."
Much of India's military, in any case, does not want Indian-made equipment. So many Russian fighters assembled by Hindustan Aeronautics have crashed in recent years that the Indian Air Force calls them flying coffins. India's Russian-made submarines and naval equipment have experienced deadly mishaps in the past year as well, leading the country's naval chief to resign last week. The distrust between the civilian builders and military users has turned the made-in-India effort into an even tougher sell. If the two sides cannot agree, the Russians are ready to step in.
"You cannot blame the Russians for taking advantage of the situation," Shukla said.
© The New York Times News Service