Defence-Oriented Economy

India’s Military-Industrial Complex


India’s shift to a Defenceoriented economy, with increasing role for the private sector, was embedded in the 2023-24 Budget. The slogan of ‘Aatmanirbhar’ or ‘indigenous’ in Defence was a camouflage. The Defence sector is increasingly a happy hunting ground for private sector, Indian and foreign, Adani being a major beneficiary.

The Budget session of the parliament was washed out, like always, with little discussion on the Budget itself, in particular the Defence allocations. Instead, ‘anti-national Rahul Gandhi’, and the Adani scam, hogged the headlines. Neither side is interested in bringing out some crucial issues. It is the Constitutional duty and the right of parliament to discuss this, but there was never any serious discussion on the huge defence allocations.

India ranks at 132 in HDI, but SIPRI says India ranks at 3, in world military expenditure 2021. It is No. 2 if military expenditure as a proportion of GDP is taken as the basis. In real value terms, it is around 2% of GDP that is going up.

Comments and discussions on the budget lamented how social sectors, education, health, welfare etc are accorded low priority. They often missed to note the huge defence component–around Rs 7.6 lakh crore, NOT Rs 5.94 lakh crore, as shown officially–and its character of serving vested interests, both of which are concealed by the government and the media. The huge budget includes amounts meant for defence sector, but shown under different accounts like those of ministries of Home, Space, R&D and Atomic Energy.

 Rs 1,27,756.74 crore, allocated to the Central Armed Police Forces under Home Ministry (with total allocations of Rs 1,96,034.94 cr, up from Rs 1,85,776.55 cr in 2022-23) are in fact part of defence. With a total strength, of over 10 lakh, they (CRP, BSF, SSB, ITBP, Assam Rifles etc) are no different from the army that has around 15 lakh troops…all of them are deployed not only along the borders, but also to suppress people fighting for their rights. The Special Protection Group (SPG), which protects the prime minister, has been allocated Rs 433.59 crore in comparison to Rs 411.88 crore given in 2022-23.

 Rs 3636.66 crore for police infrastructure, Rs 3,750 crore for modernisation of police forces, Rs 2780.88 crore has for “security-related expenditure”, Rs 350.61 crore for maintenance of border check posts and Rs 202.27 crore for Modernisation Plan IV for CAPFs…must all be added to Defence.

With a current stockpile of around 160 nuclear warheads (2022 estimate), with a range of up to 8000 km, India has its own share of weapons of mass destruction. But that could not prevent Kargil. Most of the funds under the Head atomic energy (Rs 26000 cr,) are meant for the nuclear weapons programme. So is the case with Rs 12,554 cr allocated for Space that includes ISRO and rockets. Adding up all the above–that is how SIPRI calculates- the real Defence budget is around Rs 7.6–NOT 5.94 lakh crore.

The government has its own alibis for such a huge allocation, China threat being its main, lame, and chauvinistic argument. Instead of exposing this, the Opposition vies with the ruling party in chauvinism.

The Defence Ministry in a statement on March 16 spoke of a huge Capital Acquisition: “Including today’s proposals, the total AoN (Acceptance of Necessity) granted for Capital Acquisition in the Financial Year 2022-23 is over Rs 2.71 lakh crore, out of which 99% of the procurement will be sourced from Indian industries. Such quantum of indigenous procurement will galvanise the Indian industries towards achieving the goal of Aatmanirbhar Bharat”.

Minister of state for Defence Ajay Bhatt, replying to a question in Rajya Sabha, earlier said:

“The Indian government has set a target of achieving defence manufacturing worth Rs1,75,000 crore, including defence exports of Rs 35,000 crore by 2024-25. He said the value of production undertaken by private companies and state-run defence manufacturers in 2021-22 was Rs 86,078 crore while the amount was Rs 88,631 crore in 2020-21 and Rs 63,722 crore in 2019-20.”

"Further, the DRDO has undertaken 50 mission mode and technology development projects worth Rs 23,722 crore in the last three years for development of indigenous weapons and technologies," he said.

The above report shows that the most dynamic manufacturing activity, as also R&D, in India appears to be in the Defence sector.

It is notable that with FDI beyond 50% allowed in defence, the private sector is given a lion’s share, aided by the public sector that is being made a handmaid subservient to the former.

Bhatt said the modernisation of armed forces to meet future challenges is a continuous process based on the long-term integrated planning process. Thus it is indeed a shift.

According to a report released by the SIPRI on March 13, India has “once again emerged as the largest importer of weapons” and it accounts for almost 11 per cent of all such international imports of different military equipment. The report has compared the trend based on five year blocks–2013-2017 and 2018-2022 and has indicated that “India was the world’s largest importer of major arms in 2018-22.” (financialexpress. com, March 13, 2023).

The minister also said the value of defence exports in 2021-22 was Rs 12,815 crore while it was Rs 13,398 crore till March 6 in the current fiscal. The value of production was Rs 50,499 crore in 2018-19 and Rs 54,951 crore in 2017-18.

An agrarian India last year imported edible oils, raw or processed, worth around Rs 1.5 lakh crore, and pulses worth Rs 16,500 cr. It celebrates defence exports, indicating the neglect of the farm sector and revealing the inverted priorities.

The annual acquisition plan, Bhatt said, is based on requirements of the services etc and also “emerging technologies" which implies it meets the needs not merely of defence but of capital.

Manufacture, exports, imports of defence items are very much in the daily news. They indicate a shift to a Defence-oriented economy. Given that most of it involves hi-tech, the Defence manufacturing sector has little employment potential either.

This shift to a defence-oriented economy, with a jobless growth, a big drain, is deleterious to the interests of the country, its economy, environment, the people and peace too.

It was of course started during Manmohan Singh era of Congress, but quickened by Modi regime. Defence sector, it needs to be stressed, is no holy cow; it has become a man-eater. It serves merchants of death and destruction who regard the people as ‘voting cattle and cannon fodder’.

For big capital, native and foreign, it is a lucrative business like any other with its own share of corruption, middlemen, cronyism, scams ranging from guns to coffins to Rafael aircraft, involving billions of dollars.

Many of these defence sector scandals include allegations related to bribery, and the alleged involvement of middlemen, termed as lobbyists, or arms dealers. Many former military officials are engaged in the job, some not so openly. No file can move without connivance of the Defence officials, though politicians are in the focus.
V K Singh, a former Indian Chief of the Army Staff, now a Cabinet Minister, once stated that the reach of lobbyists within the Defence Ministry extends to the level where agents have access to classified intelligence and know the inner workings of the ministry.

Now with enhanced role for private sector it will be worse. The security claims to oppose China are mere alibis when the whole sector is thus open to private business groups, native and foreign, and when all data and information are commodities.

According to the CBI, the three largest and most powerful arms dealers are Vipin Khanna, Sudhir Choudhrie and Suresh Nanda- all accused in several defence scandals, and their commissions from arms deals could be up to as high as 15%.

Pakistan, apart from China, has been a factor for these Indian hawks to stir up jingoism.. Global arms lobbies however always promoted conflicts and arms race in the subcontinent. Siachin for long wasted resources on both sides, which still continues. A political solution to the Kashmir problem is never allowed to fructify.
Ministry of Defence issued a statement on March 16, 2023:

“A meeting of Defence Acquisition Council (DAC), held on March 16, 2023 under the chairmanship of Raksha Mantri Shri Rajnath Singh, has accorded Acceptance of Necessity (AoN) for capital acquisition amounting to over Rs 70,500 crore under Buy Indian-IDDM (Indigenously Designed, Developed and Manufactured). Out of the total proposals, Indian Navy proposals constitute more than Rs 56,000 crore, which largely includes indigenous BrahMos missiles, Shakti Electronic Warfare (EW) systems, Utility Helicopters-Maritime etc…

“Including today’s proposals, the total AoN granted for Capital Acquisition in the Financial Year 2022-23 is over Rs 2.71 lakh crore, out of which 99% of the procurement will be sourced from Indian industries. Such quantum of indigenous procurement will galvanise the Indian industries towards achieving the goal of Aatmanirbhar Bharat”.

‘‘While this additional procurement of BrahMos missile system will enhance the maritime strike capabilities & Anti-Surface Warfare Operation, the addition of Utility Helicopters will multiply the operational readiness of the Indian Navy in the domain of Search & Rescue operations, Casualty Evacuation, Humanitarian Assistance Disaster Relief (HADR). Similarly, Shakti EW systems will equip and modernise the frontline Naval ships to counter any Naval Operations by the adversaries," the Ministry’s statement further said.

It is far fetched as there is no such naval threat. Real reasons are elsewhere : India is being a junior partner in Asia-Pacific Strategy of USA. All this is not meant merely for ‘defence’ of India. It is more a business opportunity for billionaires, for merchants of death, Indian and foreign.

The defence allocations are part of the “Runway to Billion Opportunities” as highlighted in the Aero India 2023 the PM Modi inaugurated last February. The country which was the biggest defence importer for decades now exports defence equipment to 75 countries, the PM said: “India has rejuvenated its defence sector in the last 8-9 years. We just consider this to be just the beginning. We aim to take defence exports to $5 billion by 2024-25.”

It is a new phase where ‘defence’ is made into an engine of growth, with an increasingly big share to the private sector: Defence Minister termed the Union Budget of 2023-24 growth-oriented. He has said this will help in making India a $5 trillion economy within a few years.

Soviet Union as a super power had it, and it was one factor for Soviet collapse. America has been at it no doubt, the military-industral complex thrived at the cost of people within USA and across the globe. One can also see the Defence expenditure is one that is not hit by the pandemic. An earlier report showed how it helped the private sector last year.
About 50 Indian companies in the private sector have contributed to defence exports to 75 countries, including some in Europe. Thus ‘Defence’ is now business too, the gullible patriots need to be told of this harmful shift over the years, now faster under Modi.

“The Indian Defence sector, the second largest armed force, is at the cusp of revolution. Defence exports grew by 334 per cent in the last five years; India now exporting to over 75 countries due to collaborative efforts,” Press Information Bureau (PIB) mentioned in a tweet.

The beneficiaries included many in the private sector: Ashok Leyland Defence Systems, Larsen & Toubro, Reliance Naval Shipyard in partnership with MDL, Mahindra Aerospace, Mahindra Defence Systems Ltd, BrahMos Aerospace, Aditya Birla Aerospace& defence Pvt Ltd.

But now Adanis who entered Defence sector late in 2017, allegedly backed by Modi, are rising fast and going for a kill. They are entering sensitive areas, for the first time, hitherto not open to Indian private sector.
Adani Defence has established India’s first unmanned aerial vehicles manufacturing facility, India’s first private sector small arms manufacturing facility and is currently in process of setting up India’s first comprehensive aircraft MRO facility in Nagpur. With the emerging threat of rogue drones, India has taken an initiative of implementing counter drone systems for both defence & civil applications.

Through its comprehensive ecosystem of Tier I & Tier II capabilities across the defence supply chain, Adani is well-positioned to facilitate integration of larger less

Thus Adanis are allowed deep into the defence sector. And the persons in authority promoted it all. It has an Israeli connection that by itself is another story that needs to be told separately.

  [This is a shorter version of an article, in two parts, published on 19/03/2023 in the online magazine,]

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Vol 55, No. 42, April 16 - 22, 2023