Growing Chinese Imports Fuel Indian Paranoia

India is continuing to run large current account and trade deficits. India's trade deficit was an estimated $86.6 billion in April- January 2009-2010, according to media reports. The Reserve Bank of India said the nation's current account deficit widened to $29.8 billion in fiscal 2009, compared with a deficit of $17 billion in prior year.



The nation’s capital account continued to be negative for the second quarter in a row. The gauge of investment flows into and out of the country showed a shortfall of $4.44 billion in the three months to 31 March, compared with a net inflow of $26.5 billion a year earlier, RBI said.

India's government has sent letters to the country's telecom companies ordering them not to buy equipment from Huawei, ZTE, and several other Chinese companies due to security risks, according to a report in Businessweek. A few weeks ago, the Wall Street Journal reported that there was a similar move by Delhi to limit China's growing role in building India's power sector.

Growing Chinese Imports:
India's imports from China expanded 19 per cent and stood at US$ 32.49 billion in 2008-09, while exports were at US$ 9.35 billion. India's trade deficit with China is expected to grow larger this year, a trend India considers alarming given the nature of imports that go into India's essential infrastructure of power generation and telecommunications networks.

Power Sector:

Chinese are now supplying equipment for about 25% of the new generating capacity India is adding to its national grid, up from almost nothing a few years ago. There are thousands of skilled Chinese expatriates at Indian plant sites, along with Chinese chefs, Chinese television and ping pong.

Telecom Sector:
India is already the biggest export market for China's two leading telecom equipment manufacturers, Huawei Technologies and ZTE, as both companies have focused on India in recent years. As India has grown to the world's No. 2 mobile phone market in recent years, its imports of Chinese handsets have soared.



Unlike China, India lacks the necessary industrial and manufacturing base for greater self reliance in infrastructure equipment and defense armaments. India also runs large current account deficits while China is enjoying large surpluses strengthening its economic position in the world.

Defense Equipment:
India is overwhelmingly dependent on foreign imports, mainly Russian and Israeli, for about 70 per cent of its defense requirement, especially for critical military products and high-end defense technology, according to an Indian defense analyst Dinesh Kumar. Kumar adds that "India’s defense ministry officially admits to attaining only 30 to 35 per cent self-reliance capability for its defense requirement. But even this figure is suspect given that India’s self-reliance mostly accrues from transfer of technology, license production and foreign consultancy despite considerable investment in time and money".


On the same theme, Russian newspaper Kommersant reported that "India has had little success with military equipment production, and has had problems producing Russian Su-30MKI fighter jets and T-90S tanks, English Hawk training jets and French Scorpene submarines."

On India's perennial dependence on imports, here's how blogger Vijainder Thakur sees India's loose meaning of "indigenous" Smerch and other imports:

"The Russians will come here set up the plant for us and supply the critical manufacturing machinery. Indian labor and technical management will run the plant which will simply assemble the system. Critical components and the solid propellant rocket motor fuel will still come from Perm Powder Mill. However, bureaucrats in New Delhi and the nation as a whole will be happy. The Smerch system will be proudly paraded on Rajpath every republic day as an indigenous weapon system.

A decade or so down the line, Smerch will get outdated and India will negotiate a new deal with Russia for the license production of a new multiple rocket system for the Indian Army.

China will by then have developed its own follow up system besides having used the solid propellant motors to develop other weapon systems and assist its space research program."


India does export some armaments but its modest record of producing and exporting weapon systems is evident from the fact that India’s defense annual exports averaged only US$ 88 million between 2006-07 and 2008-09. By contrast, Pakistan exported $300 million worth of military hardware and munitions last year.

Alternatives:

India is looking for alternative sources for critical imports to reduce its dependence on the Chinese and Russians. But it faces an uphill task with Chinese imports in particular. China has become the biggest and the most efficient factory for the world's largest American, European and Japanese companies. Even if it does manage to find non-Chinese sources, India will have to pay much higher prices for such imports. And these imports may still contain crucial Chinese components which dominate the international supply chain for most non-Chinese companies, continuing its dependence on the Chinese.

On the defense side, India has begun to diversify away from Russia. Israelis have become major suppliers to India, and the US and Europeans are now bidding to sell military hardware to India. Both Israeli and Western equipment carries significantly higher price tags than imports from Russia.

Summary:

In spite of Gandhi's Swadeshi movement and Indian policy of developing self-reliance, the nation remains heavily dependent on imports from China for its critical infrastructure, and its growing appetite for weapons systems on Russia and Israel. These growing imports are fueling India's current account deficits, and adding to its paranoia with regard to the rise of China. In response, Indian government is acting to reduce dependence on Chinese imports, a move that will likely to add further to its trade imbalance because of the higher costs of imports from non-Chinese and non-Russian sources.

Related Links:

India-Israel Military Relations

Pakistan's Military Production

BRIC, Chindia, and the "Indian Miracle"

India's "Indigenous" Weapons

Pakistan's Telecom Boom

India's Growing Defense Budget

Comments

Riaz Haq said…
Here's an interesting commentary by Sudha Ramachandra about India's future prospects:

The populations of Europe and Japan are already graying, and the working-age populations of the United States and China are projected to shrink too in the next two decades. By 2020 the US will be short 17 million people of working age, China 10 million, Japan 9 million and Russia 6 million. However, India will have a surplus of 47 million people, giving the country a competitive edge in labor costs, which will be sustainable up to 2050, according to a study by Goldman Sachs.

Economists say India will catch up with the Chinese economy beginning in 2030, when the latter could cool off as the result of an aging population. "The window of opportunity offered by a population bulge has clearly opened for India," points out noted economist C P Chandrasekhar of Jawaharlal Nehru University in New Delhi. After decades of evoking despair, India's demographic profile is finally beginning to stir hope.

But not everyone views the population bulge with such optimism. Some analysts say it is not enough to have a young population. The working-age population needs to be healthy and literate.

India's score on this, while improving, is certainly not inspiring. About 50% of all Indian children are undernourished, a large percentage of them born with protein deficiency (which affects brain development and learning capacity, among other things). This is hardly the ideal foundation for a productive workforce, as the likelihood of a malnourished child growing up to be an able adult is rather dim.

There is also the question of whether the population has the skills and knowledge to take on India's future work. Literacy has improved dramatically over the years - just 14% of the population was literate in 1947 versus about 64.8% today - but many who are classified as literate can barely read or write. And 40% of those who enroll in primary schools drop out by age 10. The curriculum in the schools, especially the government-run ones, does not prepare the child for the domestic job market, let alone the global one. The huge "workforce" might not be qualified to do the work.

Moreover, India's rich and educated classes are preferring to have small families, so the additions to the population are coming largely from the poor, illiterate sections in society. Nicholas Eberstadt, who researches demographics at the Washington-based American Enterprise Institute, points out that while India's overall population profile will remain relatively youthful, "this is an arithmetic expression averaging diverse components of a vast nation. Closer examination reveals two demographically distinct Indias: the north that stays remarkably young over the next 20 years, and a south already graying rapidly due to low fertility."
Riaz Haq said…
Here are excerpts from a Wall Street Journal report on Chinese Premier Wen Jiabao's visit to New Delhi:

Mr. Wen sought during the visit to strengthen commercial ties with big-ticket investment proposals and a promise to further open China's markets to India.

On Wednesday, Indian and Chinese companies signed more than 40 deals in the power, commodities and telecoms sectors for a combined $16 billion. Many of the deals were Chinese bank financing agreements for large Indian orders of Chinese exports of telecom and power-producing equipment.

During the first 10 months of 2010, China exported goods valued at $32.87 billion to India, but its imports totaled only $17 billion.Mr. Wen reiterated that Beijing will heed New Delhi's request to broaden access of Indian exports such as pharmaceuticals, information technology and agricultural products to shrink India's trade deficit.Mr. Wen also said in his speech to the diplomats that China understands and supports India's desire to play a bigger role at the United Nations, including the Security Council. China has long opposed a permanent seat for India on the council, and Mr. Wen's comments Thursday didn't appear to represent a change to that position. President Barack Obama during a visit to India in November for the first time publicly backed India's inclusion as a permanent member of the Security Council.

India, concerned over its trade deficit of $19 billion last fiscal year, wants better market access for its exports. For now, India's main export to China is iron ore, while it imports large amounts of high-value manufactured goods.

"The two sides agreed to take measures to promote greater Indian exports to China with a view to reduce India's trade deficit," the two countries said in a joint statement.

India-China trade ties have often been rocky, as India continues to impose antidumping duties—the highest by any country at the World Trade Organization last year—against Chinese products, alleging that the prices of some goods are set artificially low.

China has also raised objections to India's stringent regulations in sourcing power and telecommunications equipment, calling them discriminatory.

China and India have shared interests in reform of the council, with both supporting expanded representation of developing countries, Mr. Wen said Thursday.
Riaz Haq said…
India tops arms imports in the world, according to Bloomberg News:

India replaced China as the world’s top weapons importer, according to a study by the Stockholm International Peace Research Institute, as it aims to modernize its armed forces and project power through the region.

India received 9 percent of the volume of international arms transfers from 2006 to 2010, with 82 percent of that coming from Russia, Sipri said in a report released today. That topped China, South Korea and Pakistan, it said.

“The increases are substantial, and if you look at the Indian plans for the near future, they are massive,” Siemon Wezeman, a Sipri researcher who helped write the report, said in a telephone interview. “It’s worrying from the fact you are bringing a lot of weapons into an area that isn’t particularly stable, where you’ve got countries that have been at each other’s throats.”

India’s internal security threats and rivalries with Pakistan and China, the nuclear-armed neighbors with which it has border disputes, have driven the increase in expenditures, Wezeman said. The country’s plans to boost defense spending in the next decade to modernize the military have attracted U.S. and European firms banned from selling weapons to China.

The average volume of worldwide arms transfers in 2006-2010 was 24 percent higher than in 2001-2005, the report said. The Asia-Pacific region led the world, accounting for 43 percent of arms imports. It was followed by Europe at 21 percent, the Middle East at 17 percent and the Americas at 12 percent.
Economic Growth

India’s $1.3 trillion economy may expand by as much as 9.25 percent in the next financial year, the fastest pace since 2008, according to a Finance Ministry survey released last month. The World Bank estimates that more than three-quarters of India’s 1.2 billion people live on less than $2 a day.

Purchases by India of submarines, aircraft carriers and transport airplanes “can only be seen in the framework of regional ambitions,” Wezeman said.

India is seeking to buy 126 warplanes in the world’s biggest fighter-jet purchase in 15 years, according to the Indian Defense Ministry. Paris-based Dassault Aviation SA (AM), Chicago-based Boeing Co. (BA), Bethesda, Maryland-based Lockheed Martin Corp. (LMT), Sweden’s Saab AB (SAABB), Russia’s United Aircraft Corp. and European Aeronautic, Defense & Space Co., based in Paris and Munich, are competing for the contract.

The outlays on weapons have allowed India to demand technology transfers as part of purchases, Sipri said. The U.S. and Europe have banned weapons sales to China since the 1989 Tiananmen Square crackdown. U.S. military officials have questioned China’s motives in developing ballistic anti-ship missiles and radar-evading fighter jets.
‘Huge Market’

India is “in a position where they have this huge market at a time when exporters are in desperate need to find export markets,” Wezeman said.

The U.S. remains the world’s largest exporter of military equipment, accounting for 30 percent of arms deliveries between 2006 and 2010, the report said. The Defense Department is requesting $671 billion for the 2012 fiscal year starting Oct. 1, $37 billion less than this year’s request.

Stockholm-based Sipri, founded in 1966, conducts research into conflict, armaments, arms control and disarmament, according to its website. A substantial part of its funding comes from the Swedish government, it said.
Riaz Haq said…
Here are recent 2011 updates on Pakistan's defense imports as reported by defenseindustrydaily.com:

March 1/11: Aviation Week reports that Pakistan is in negotiations with the U.S. to get more Lockheed Martin F-16s over and above the 63 currently in service (18 F-16C/D Block 52, 45 F-16A/B Blocck 15/OCU that will be upgraded). No numbers have been specified, by Pakistani officials see it as part of a dual-track strategy that will also include more spending on domestic projects like the JF-17 Thunder, to improve Pakistan’s own manufacturing capacity.

At present, PAF Air Chief Marshall Rao Qamar Suleman says that 4 F-16A/Bs went to the USA for technical verification inspections and upgrade kit development, and the 1st 3 F-16A/Bs are now undergoing the upgrade at Turkish Aerospace Industries (TAI). All of Pakistan’s F-16s are expected to be upgraded by 2013-2014. At present, no systems exist that would bridge the F-16 and JF-17 fleets, but Air Chief Marshall Suleman says that Pakistan intends to eventually field a supplementary datalink, which would work alongside the Link 16 systems carried by the F-16s.

The comments come as the Pakistani military is also discussing a deal to buy Chinese submarines as a supplement to their French Agosta-class boats, as an intended prelude to joint submarine development. These plans are all being made against a backdrop of a serious domestic insurgency and widespread flooding damage, which have combined to create over 1 million internal refugees, and threaten the government’s medium term ability to maintain control of the country. Even as the state is very obviously fraying in other ways.

Jan 20/11: Goodrich Corporation of Chelmsford, MA receives a $71.9 million contract for 5 DB-110 Pods, 2 datalink upgrades to existing pods, 2 fixed ground stations, 1 mobile ground station, and 4 ground station datalink receiver kits, plus initial spares, technical manuals, minimal initial engineering support for final in-country installation, integration, testing and a study for a potential fusion center. This supports Pakistani F-16 aircraft. At this time, $17.3 million has been committed by the ASC/WINK at Wright-Patterson Air Force, OH on behalf of their Foreign Military Sale client (FA8620-11-C-3006).

The DB-110 reconnaissance pod offers day and night capabilities, and has been ordered by a number of F-16 customers, including Egypt, Greece, Morocco, Oman, Pakistan, Poland, and the UAE. DB-110s were not mentioned in the DSCA upgrade requests, but they are clearly part of that effort now. Reports indicate that installations began in June 2010; this is apparently a follow-on order. A Jan 12/11 US FedBizOpps solicitation for associated imagery analysis training is a useful reminder that buying the pods is not enough to field a useful capability. See also Aviation Week re: DB-110.
Riaz Haq said…
India's Prime Minister Manmohan Singh is travelling to China, as the two countries look to boost economic ties, according to the BBC:

In December, the two countries agreed to increase bilateral trade to $100bn (£66bn) by 2015, up from $60bn in 2010.

Mr Singh will also attend a summit in China that will include Brazil, Russia, India, China and South Africa.

China is India's largest trading partner. However, the two countries still share a very unbalanced trade relationship.

"India's import dependence on China has gone up significantly on critical items," said Samiran Chakraborty, regional head of research for India at Standard Chartered Bank.

"Whereas if you look at exports, India's primary export to China is only iron ore."

Mr Chakraborty says this issue could come up during the visit.

"One of the demands is to open up the Chinese markets to India. Otherwise the trade balance is very much in favour of China and working against India," he adds.
'Complimentary relationship'

When China's Prime Minister Wen Jiabao visited India in December, the two sides agreed to take measures to promote Indian exports in China, in an effort to reduce India's trade deficit.

About 400 business leaders came with Mr Wen to India and business deals worth $16bn were signed.

The two countries also agreed to expand co-operation in infrastructure, environment, information technology, telecommunications, and investment and finance.

Mr Chakraborty says it is in each sides interest to continue to deepen ties.

"If these two have to stay side by side sharing borders and trying to grow at high growth rates it has to be a complimentary relationship rather then a tense relationship," Mr Chakraborty said.

"Otherwise it will impact the investment climate in both countries".
Riaz Haq said…
India faces serious financial crisis, reports Economic Times:

--------------
Unlike most of its Asian peers, India has recently been running large current account and fiscal deficits. That means it must attract sufficient foreign money -- namely U.S. dollars -- to close the gap, and a weaker home currency makes that costlier.

This is a perennial problem for India. The current situation is so worrisome because India is grappling with big internal and external economic threats simultaneously. Growth is slowing. Inflation remains high. Political paralysis has stymied domestic reforms.

The RBI, the last line of defence against a currency meltdown, has cautiously begun to support the rupee, but its firepower may be more limited than its $300 billion in reserves would suggest.

Beyond India's borders, Europe is the biggest worry. As its banks deleverage, investment money has flooded out of India's markets. If Europe's debt troubles deteriorate, India could be hit with a balance of payments crisis as severe as the one that forced a sharp devaluation in 1991.

The rupee, which has dropped 16 percent in the past four months, got a reprieve last week after the world's big six central banks banded together to try to ease dollar funding strains, helping it to snap a four-week losing trend.

But analysts widely expect the rupee, trading on Monday at 51.26 per dollar, to resume its slide.

"The Indian currency will be the first casualty of a deterioration in the euro zone crisis," said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai.

If Europe's crisis deepens, India's trade deficit would widen even more rapidly, and it would have even more trouble attracting foreign capital.

"Risk appetite will obviously collapse and gradually the currency crisis is likely to take the shape of a balance of payments crisis," Nitsure said.

Worries about India have spiked in tandem with concern over Europe. UBS hosted a client conference call about India on November 29, which it announced with an email headlined "India explodes." Deutsche Bank sent out a report on November 24 entitled, "India's time of reckoning."

"Suddenly everything seems to be coming to a head in India," UBS wrote. "Growth is disappearing, the rupee is in disarray, and inflation is stuck at near-record levels. Investor sentiment has gone from cautious to outright scared."

India's current account deficit swelled to $14.1 billion in its fiscal first quarter, nearly triple the previous quarter's tally. The full-year gap is expected to be around $54 billion.

Its fiscal deficit hit $58.7 billion in the April-to-October period. The government in February projected a deficit equal to 4.6 percent of gross domestic product for the fiscal year ending in March 2012, although the finance minister said on Friday that it would be difficult to hit that target.

India relies heavily on portfolio inflows -- foreign purchases of shares and bonds -- as a means of covering its current account gap. Those flows are fickle.

Foreign portfolio investors have sold a net $50 million worth of equities so far in 2011 , in sharp contrast to the $29 billion they invested in 2010, data from the Securities and Exchange Board of India's website showed. In November alone, foreign funds pulled $661 million out of Indian stocks.

"The Indian economy is one of the most vulnerable to liquidity shocks in the region, not helped the least by deficits in its key balances," said Radhika Rao, an economist with Forecast PTE in Singapore.--------..
Riaz Haq said…
Here's a Bloomberg report on India exaggerating its exports:

India’s commerce ministry said it overstated merchandise exports by $9 billion in the eight months through November because of “misclassification and errors” in computing overseas sales.

“Notwithstanding the misclassification, there were errors in double counting and all sorts of things which inflated exports by about $9 billion,” Commerce Secretary Rahul Khullar told reporters in New Delhi yesterday. Overseas sales in the April-to-November period now stands at $192.7 billion, Khullar said.

India’s monthly export growth has averaged about 44 percent since April even as Europe’s debt crisis and a faltering U.S. recovery reduced global consumer demand, prompting economists to question the quality of the data. Today’s revision explains “in part the weakening of the rupee,” Asia’s worst-performing currency this year, said Jay Shankar, Mumbai-based economist at Religare Capital Markets Ltd.

“The global economy isn’t doing well, so it was hard to understand how India was posting such fantastic export numbers,” said Biswajit Dhar, director of New Delhi-based Research and Information System for Developing Countries. “There were reasons to believe something was going wrong.”

The rupee weakened 0.6 percent to 52.04 per dollar in Mumbai yesterday, extending its decline this year to 14.1 percent. The BSE India Sensitive Index (SENSEX), which has lost a fifth of its value in 2011, dropped 1.7 percent. The yield on the 8.79 percent bonds due November 2021 rose two basis points, or 0.02 percentage point, to 8.54 percent.
Waning Demand

India’s exports in November were $22.3 billion, Khullar said, without elaborating. Bloomberg calculations based on previously announced data show exports grew 3.7 percent last month from a year earlier, the slowest pace in more than two years.

The South Asian nation’s imports in November were $35.9 billion, he said. Imports in the eight months through November were $309.5 billion, causing a trade deficit of $116.8 billion in the period, Khullar said.

India will get “close to, but not quite $300 billion in exports” in the year ending March 31, he said.

The South Asian nation’s export growth has vacillated this year, surging 82 percent in July before slowing to an 11 percent gain in October, according to previously reported data by the commerce ministry.

A report by Mumbai-based Kotak Institutional Equities Research in October showed “wide gaps” in engineering export numbers released by the government and data culled from annual reports of the top 500 companies on India’s exchanges for the year ended March 31.

While official announcement showed engineering exports jumped 79 percent to $68 billion in the year through March, data collected by Kotak from company reports indicated only an 11 percent increase to 638 billion rupees ($12.3 billion) during the period, according to the report written by Sanjeev Prasad, Sunita Baldawa and Amit Kumar.


http://www.bloomberg.com/news/2011-12-09/india-overstated-exports-by-9-billion-this-year-ministry-says.html
Riaz Haq said…
Here's an Atlantic Mag piece arguing that China is much bigger than the rest of BRICs:

In 2001, China's GDP was equal to the GDP of all the RIBS combined. In the five years since the global financial crisis, just the increment of growth in China's economy is larger than the entire economies of Russia and India combined. Indeed, in the half decade since the financial crisis, 40 percent of all growth in the global economy has occurred in China.

Last year, the economy of China expanded by $1 trillion; Russia and India grew by $100 billion; Brazil and South Africa shrank. In 2001, China ranked sixth among the world's economies. Today it stands at number two, on track to overtake the U.S. and become the world's largest economy in the next decade.

In trade, China accounts for 11 percent of global merchandise exports, roughly double that of the RIBS combined. Moreover, the markets to whom China and the RIBS export and from whom they buy are the U.S., the EU, and Japan. Merchandise trade among China and the RIBS barely registers in world trade statistics.

In foreign reserves, China held twice as much as the RIBS combined in 2001 (with $220 billion), and now holds three times as much as the others (with $3.3 trillion). In greenhouse gas emissions, China accounts for 30 percent of the global total, more than twice the amount of the RIBS combined.

Goldman Sachs continues trumpeting the rise of the BRICS (though it refuses to include South Africa, which was pulled into group by China in 2010). Its latest "BRIC Fund" prospectus forecasts that by 2030, the BRIC nations will have a combined economy larger than that of the G7. If this happens, the most important part of the story will be that China added $17 trillion to the global economy, effectively creating another United States in less than 20 years.

Concepts that jumble together elements with more differences than similarities sow confusion. While it may have played a useful purpose at the beginning of the century to highlight faster-growing emerging economies, BRICS has become an analytic liability. Like generalizations about per-capita growth in countries where wealth disparities are widening (as the rich get richer while the income of the poor declines), submerging China in this acronym misses more than it captures. If a banner is required for a meeting of these five nations, or for a forecast about their economic and political weight in the world ahead, RIBS is much closer to the reality. Even if governments, investment banks, and newspapers keep using BRICS, thoughtful readers will think China and the rest.


http://www.theatlantic.com/china/archive/2013/03/china-doesnt-belong-in-the-brics/274363/
Riaz Haq said…
Here's an Indian Express story on how Indian PM was snubbed by South Africans at BRICS summit:

The Indian delegation has returned quite upset from South Africa and for good reason, because this is, perhaps, the first time that the Indian Prime Minister has gone to a country and failed to hold a separate meeting with the host.


What probably hurt more was that Singh was the first among the BRICS leaders to reach Durban on March 25, a day before the summit, and still Zuma could not find the time while he played the proper host to his Chinese and Russian counterparts. In the end, Singh managed to hold separate meetings with all BRICS leaders except Zuma.

The Chinese side had turned Xi's visit into a state visit, which meant South Africa had full-fledged bilateral fare laid out, with agreements and deals being signed on the side. While Zuma had to give nearly an entire day to Xi in Pretoria, he could not ignore Russian President Vladimir Putin in Durban because Moscow had converted the trip into a "working" visit which meant formalised bilateral content like adding some new clauses to their bilateral treaty of friendship and cooperation.

As a result, India and Brazil seemed relegated. India, perhaps, a bit more. For starters, the South African government took control of all hotel accommodation in and around Durban since heads of states and government of some 18 African countries were also to be there for a retreat with BRICS nations on March 27.


It's not clear how the dice rolled, but the Prime Minister found himself allotted a resort in Zimbali, 40 km from Durban while the Brazilian, Russian and Chinese leaders were lodged in hotels within Durban, close to the venue where the summit was held over two days.

So, Singh had to travel into the city on both days of the summit, March 26-27, and also suffer the long delays in the program

Unlike Singh, the Brazilian President, who was to meet Zuma after the meeting with the PM, refused to wait and left for her hotel — an option unavailable to the PM as his location was out of town.


http://www.defence.pk/forums/world-affairs/243108-india-ridiculed-brics.html
Riaz Haq said…
India's continuing abject failure to build a robust defence industrial base (DIB) has come to into focus once again, with an international thinktank holding its arms imports are now almost three times as high as those of the second and third largest arms importers, China and Pakistan.

As per the latest data on international arms transfers released by Stockholm International Peace Research Institute (SIPRI), the volume of Indian imports of major weapons rose by 111% between 2004-08 and 2009-13, and its share of the volume of international arms imports increased from 7% to 14%.

The major suppliers of arms to India in 2009-13 were Russia (accounting for 75% of imports) and the US (7%), which for the first time became the second largest arms supplier to India, said SIPRI. As earlier reported by TOI, the US has already bagged defence deals close to $10 billion over the last decade in the lucrative Indian defence market, with the latest being the $1.01 billion one for six additional C-130J "Super Hercules" aircraft.

The other deals on the anvil are the ones for 22 Apache attack helicopters, 15 Chinook heavy-lift helicopters, four P-8I maritime patrol aircraft and 145 M-777 ultra-light howitzers, together worth another $4 billion or so.

SIPRI, on its part, said the USA's share of Pakistani imports in the same period was 27%. China was also a major supplier in the region, accounting for 54% of Pakistani arms imports and 82% of Bangladeshi imports.

"Chinese, Russian and US arms supplies to South Asia are driven by both economic and political considerations," said Siemon Wezeman of SIPRI. In particular, China and the US appear to be using arms deliveries to Asia to strengthen their influence in the region, he added.

The five largest suppliers of major weapons during the five-year period 2009-13 were the United States (29% of global arms exports), Russia (27%), Germany (7%), China (6%) and France (5%).

Despite India's emergence as the world's largest arms importer over the last decade, the modernisation of its armed forces continues to take place in a haphazard manner due to the lack of concrete strategic planning in tune with the country's long-term geopolitical objectives, as reported by TOI earlier.

The Indian armed forces are still grappling with critical shortages in fighter jets, submarines, helicopters, howitzers, night-fighting capabilities and the like. The IAF, for instance, is down to just 34 fighter squadrons when it requires at least 44 to be "comfortable" against the twin-challenge posed by Pakistan and China.

A K Antony, who has been India's longest-serving defence minister, may have often chanted the mantra of "indigenisation" during his seven-and-a-half year tenure, especially after defence scams erupted one after the other, but failed to deliver meaningful systemic reforms on the ground.

There was, for instance, no concrete revamping of the DRDO and its 50 establishments as well as the five defence PSUs, four shipyards and 39 ordnance factories to ensure they deliver weapon systems without huge cost and time overruns.

http://timesofindia.indiatimes.com/india/Indias-arms-imports-almost-three-times-of-China-Pak-SIPRI-report/articleshow/32190097.cms
Riaz Haq said…
ndia and China have signed 12 agreements in Delhi, one of which will see China investing $20bn (£12.2bn) in India's infrastructure over five years.

At a news conference with Chinese President Xi Jinping, India's PM Narendra Modi said "peace on the border" was important for progress.

Talks came as India accused China of fresh territorial incursions in Ladakh.

China is one of India's top trading partners but they vie for regional influence and dispute their border.

Mr Modi and Mr Xi made separate statements at the end of their talks in Delhi on Thursday.

Under the investment plans, China pledged to:

Help bring India's ageing railway system railway system up-to-date with high-speed links and upgraded railway stations.
Set up industrial parks in Gujarat and Maharashtra.
Give more market access to India to products, including pharmaceuticals and farm products.
Both sides also focussed on increasing co-operation in trade, space exploration and civil nuclear energy.
------
Indian and Chinese companies have also signed preliminary deals worth more than $3bn (£1.8bn) in aircraft leasing and telecoms, among other sectors.

Despite the continuing tensions, trade between India and China has risen to almost $70bn (£43bn) a year, although India's trade deficit with China has climbed to more than $40bn from $1bn in 2001-2002.


http://www.bbc.com/news/world-asia-india-29249268

Popular posts from this blog

Economic Comparison Between Bangladesh & Pakistan

Smartphones For Digital & Financial Inclusion in Pakistan

India's Demonetization Disaster: Modi Likens Critics to Pakistan