Indigenous Defence Industry – The coming boom

 

India was one of the biggest weapon’s importers in the world and was a dream for the various arms exporting countries. There was almost no ecosystem for arms manufacturing in the country. The mindset of the bureaucracy was so well entrenched that governments prior to 2014 could not do much to start an arms industry in the country despite the demand. Also, the private industry was kept out of this loop due to either vested interests or a convenient lack of trust shown by the bureaucracy.

The Ordnance Factory Board had become a fiefdom which created bureaucratic hurdles instead of facilitating arms purchases. There was also a mindset which pervaded all through the government which promoted the myth that Indian industry was incapable of making modern weapons.

With the new government coming in 2014 the scenario changed for the better, though gradually. The mindset had to be changed before anything else. But over the last 4 – 5 years or so things have improved. India has a very vibrant startup ecosystem. It is throwing up a large number of unicorns every year. This would have been a colossal waste of talent if the old way of doing things had persisted. Now the startups can participate in MoD tenders and competitions and bag lucrative contracts to design weapons and equipment for all branches of the forces.

Now startups make up a substantial part of the new arms designers for the MoD. The new ‘Atmanirbhar’ policy has helped them tremendously. Self-reliance in defense is the new ‘mantra’.  The earlier mindset is also changing and Indian private industry has started getting contracts for design and manufacture of weapons systems. Of course, not all arms can be made in India. Some of the technology which is not available in India will be imported. The government has published negative lists of weapons and equipment. The items on this list will not be imported. There will be import substitution of these items.

The changes implemented so far have paid dividends. India has bagged its first export deal for the Brahmos cruise missile made in collaboration with Russia. The Tejas Light Combat Aircraft is also in contention with other global competitors in tenders for supply of fighter and trainer aircraft.

With the current scenario unfolding, the future of this industry looks bright. As more private players come into the industry there will be competition, and will create a whole new ecosystem. This was lacking since independence. Going forward the Defense industry will become one of the main revenue streams for the government as the export potential of this industry is huge.

A right step has been taken as far as the Indian fighting forces are concerned. They are now being supplied largely by indigenous manufacturers. It is known from earlier experiences that civilian industry benefits from research and development in the defense industry and vice versa. This push to the arms industry could provide a giant leap forward for manufacturing in the country in a few years. 

Russia – Russia Ukraine war, a European problem

 

Many people, experts and thinkers have analysed the causes of the current war between Russia and Ukraine. Most of them have touched upon the fact that one of the main reasons was the expansion of NATO. After the Second World War it was felt that Europe alone may not be able to cope up with the Soviet Union and its military might. So America took the initiative to support Europe.

The NATO (North Atlantic Treaty Organization) came into being with the purpose of countering the threat from the erstwhile USSR. America was also a super power by then and it is no surprise that it dominated the NATO Agenda. From then on Europe was relegated to being a vassal of the US. Most of the expenses of the arms build-up on the continent of Europe  during the height of the cold war was financed by America. Naturally America got the last word in deciding the NATO strategy.

From here on we see that Europe has always played second fiddle to the US. America took upon itself to solve any problem arising in Europe. America is used to act like a policeman of the world and will intervene in any crisis anywhere. Bosnia, Herzegovina, Kosovo. NATO has not solved any problem in Europe. The current Russia Ukraine war is another example. The problem was created by NATO itself by expanding indiscriminately and unnecessarily eastwards. All Russian warnings were ignored. It was when Ukraine asked to be included in NATO that Russia called it an existential threat.

Europe could have managed this affair internally. It did not need America. European dependence on Russian Oil and Gas was well known. The EU could have talked with Russia and kept this a European affair. Russia was viewed by Europeans more as a trading partner than as an enemy. The crisis would not have spiraled to such a degree if only European countries were involved. However, when NATO entered the picture as it inevitably had to, the American perception of Russia as an enemy got prominence.  

NATO is an outdated entity in today’s geopolitical scenario in Europe. With the collapse of the USSR it had no real role to play against Russia. But since Europeans never really showed any confidence in solving their own problems, America could prevail on them to let NATO keep working as a treaty. However it had become irrelevant long back. But Europe seems to be obsessed with NATO membership. Every single country in Europe now wants to join an organization whose sell by date is long past.

Instead of accommodating Russia after the fall of the USSR, Russia was further alienated. It was never truly integrated into the European scheme of things. As a result, the trust deficit between the two sides remained. Also there are rumors that certain private mercenaries and even SAS soldiers are fighting undercover in Ukraine. If true, this does not look good for an early solution to the conflict. Russia has threatened to use its nuclear weapons if America and the west does not stop its proxy war.

Decoding what Putin wants from this war is the key here. The analysts have not been able to decipher that yet. Meanwhile, arms, ammunition and other equipment is now pouring into Ukraine. This is exactly what should have been avoided if the war is to end soon. NATO (read American) involvement has exacerbated the situation. The Russia Ukraine war is now predicted to become a protracted conflict which will engulf other countries of Europe. 

America thinks the Ukraine war is a no holds barred wrestling match. NATO is trying its best to defeat Russia on the battlefield. But this will not happen. Diplomacy is the only way to stop this conflict. Unfortunately nobody seems to have realised that giving arms to Ukraine is tantamount to pouring oil into the fire. Taking a back seat (read a compromise) is unthinkable for the West. 

The final solution of this war will have to be by diplomacy and talks, not weapons or sanctions The Europeans may have to provide Russia with a face saver or a palatable compromise, to help stop the war. Whether that could be negotiated under the auspices of NATO remains to be seen.

The Shifting Balance of Power

 It is difficult to predict the course of events when action is happening on the ground. Like the war between Russia and Ukraine. While this war may have started from the aggressive policies of the west and the mistrust of Russia towards anything NATO, we need to look at how the immediate future is going to shape up.

There is no doubt that the west now has the bit between the teeth and is backing the Ukrainian war effort to the hilt. In the west, a lip service was being paid to the compulsions faced by Russia.

Russia has always been seen as the enemy of the west and was never really integrated into the comity of nations even after the fall of the USSR. The result was that the mistrust between the two sides persisted. The west with its economic clout never really cared because they did not feel the need to help the Russians. Technology was and is still monopolized by the west, especially America.

This war is being watched by all the world and every country is drawing different conclusions from what is happening on the ground.

American and European aid is now pouring into Ukraine and Poland. But there are other perspectives on this situation. Sitting in India the strategic thinkers view this differently. China is elephant in the room. India is concerned about China trying to do a Ukraine in Taiwan. Also, the China Pakistan axis has been worrying India for the past decade. The situation in Afghanistan has been relegated to the backburner since this war started but is very much relevant for the countries in this region.

India has not criticized Russia for the invasion and has bought Russian oil. The sanctions imposed by the US on Russia has jeopardized purchases of Indian arms which is a major concern. India is also concerned that Quad may not live up to its expectations as the current political stance taken by her has rankled the other members, especially the US.

Despite China calling Russia its strategic partner, Russia does not fully trust China. China has a penchant of looking exclusively for its own interests. The Russians are opening up a trade route along the Arctic Circle as the Arctic ice thaws. China is eyeing this development and wants to invest heavily into this infrastructure. Russia has reservations about letting China increase their presence in this area as China may completely swamp the infrastructure with their economic clout. Thus, the Russo-Chinese friendship may be one of convenience rather than trust.

The NATO is not politically united either. Europe buying most of its energy from Russia is still a sore point with the US. In all this upheaval, countries are feeling insecure as strategic agreements signed earlier do not look so dependable now. It is every nation for itself. The US has sanctioned a $2b budget to help Ukraine. May experts are pointing out that Putin declaring war on Ukraine has benefitted the arms manufacturers.  

 The big institutions like the G7, G10, G20, IMF, World Bank have lost some their importance in the order of things. To a certain extent so has NATO. China today is the world’s largest creditor. The dollar itself may not be able to hold on to its Reserve Currency status as countries look at alternative payments systems to avoid the diktats of the US. This war comes on the heels of the pandemic which has imposed unprecedented hardships on the people of the world. Governments across the world do not want to impose more hardships on their people. Thus, there is a reluctance to align with the sanctions regime.

As to who will lead the world is the question being asked all over the world by strategic analysts. The contenders could be the US, India, China. No other country in the world has been projected as of now. In Asia, India is best placed to lead the world. China is definitely a contender, however, its demographics do not favor such a role. Also, China is autocratic and lacks transparency in the working of its key institutions.

The geopolitics of the world is in a state of flux. Every nation is on the lookout for its own interest.  This is a transitory phase. Changing of the world order comes after decades of gradual and miniscule changes in the balance of power among nations. However, what the morrow brings will be very interesting to see indeed.  

A policy shift – for a new World Order

 

Of late the Indian subcontinent is seeing unprecedented turmoil. After the pandemic it looked as though the countries in the region had managed to avoid the worst of the effects. But that is not the case as is evident now. However, the story goes back a few years before the pandemic hit the sub-continent.

Sri Lanka is currently ruled by a single family. Brothers, cousins and uncles hold posts in the government. The rulers took heavy loans from the Chinese, seemingly for development. But as is now common knowledge, Chinese loans are a sure-fire recipe for disaster for any developing economy.

India has provided a line of credit to Sri Lanka to mitigate its immediate problems of food and other essentials.

In many countries in the region the story is the same. A combination of heavy external debt, taken by a ruling dispensation which was partial to the Chinese and populist policies followed at home. The economies of Nepal, Pakistan and the Maldives are also facing serious headwinds.

Why this is significant is that these predatory tactics by China are meant to keep the indebted countries under the Chinese thumb. It is no secret that China wants to become a regional hegemon. They are ready to achieve their goals by any means. The blatant claim over the South China Sea was an early sign which was ignored by the regional powers. 

India has its work cut out to contain China. But contain China it will have to. The spate of infrastructure projects in the country, from ports to roads, the ‘Atmanirbhar’ policy, the digital payment systems, the various PLI schemes for boosting exports, all are geared towards strengthening of the economy. Currently China has an overwhelming advantage in the economic sphere.

However, the pandemic has changed the view of the world regarding supply chains. It was realized that the world was overly dependent on China for most of its goods. As China went into a lockdown the world faced shortages. Now supply chains are being diversified to other countries as well. Most of the supply chains originate in Asia and the Indo Pacific.

The pandemic also had a big negative impact on Chinese Belt and Road projects. Many countries like Malaysia. Indonesia, Thailand, Maldives, Bangladesh and even Pakistan have realized that B&R projects bring nothing but misery to countries in which they are implemented.

China is today grappling with an unprecedented fourth wave of the pandemic. China’s status as a workshop of the world will be downgraded as companies leave China for other locations.

Being a regional power and viewed as a benevolent giant, India will have to step in to stem the rot initiated by China. This will take some doing as India is still grappling with its own problems arising out of the lockdowns which had to be imposed during the pandemic. However it looks like India is on its way to a faster recovery than what was anticipated.

India will need to gear up to compete with China on the economic front. Militarily they are already at loggerheads because of the border dispute. However, most of the countries in the region consider India to be the only power which can counter China if push comes to a shove. India has its work cut out to live up to those expectations. The recent overtures by China to separate the border dispute from the trade relations was shot down by India.  

The war in Ukraine has also has had some positive impact. Egypt, which is the largest buyer of wheat in the world has approved India as a supplier, as Ukraine is out of the market. The Sri Lankan crisis has opened up the Iranian Tea market for Indian exporters. Russia is selling oil at a discount. 

The Ministry of External Affairs recently has been building a narrative which stresses on an independent foreign policy. This has been stressed during the Indo-US 2+2 interactions as well as during the Raisina Dialogues. The message is that India will follow an independent foreign policy guided by its national interest take sides.

The balance of power is changing in the world. India is the only country in this part of the world which has shown a marked change in its approach to its relations with other countries. National interest has been placed front and center by India in all her dealings with foreign powers. She has resisted pressure to cut her economic and military ties with Russia, also, earlier, India did not sanction the ruling junta in Myanmar and cut off ties as it saw China trying to increase its influence there.  If India is to lead the new world order, it has to start with its neighborhood.

Disruptions and the emerging new World Order

 

Ever since the pandemic hit the world in 2019, the world has not seen a single normal day. These last three years have been like a roller coaster ride for the world. Nevertheless the experts are saying we may be past the worst of the corona pandemic. However the ride just got faster and it is not stopping.

The Russia-Ukraine conflict has started and the world has had to remain strapped in even as it sees the pandemic waning. Globalization has made countries so interdependent that any disturbance in any corner of the world causes disruptions in other parts of the globe.

Of late, i.e. in the last two years, supply chains have become crucial for economic development. If you are a part of the some supply chain, you get a piece of the action and benefits follow.

However, these chains are vulnerable to even small disruptions. The Russia-Ukraine conflict is not a small disruption by any standards. Russia and Ukraine are major suppliers of commodities like wheat, oil, and Soya and rare minerals like palladium, platinum, Lithium etc. These countries also have a robust defense industry with world-wide links. All these supply chains are now broken as both countries are at war. This has affected many countries badly.

The call went out from the west and NATO allies to the rest of the world to sever ties with Russia as it was the aggressor. However the call was not heeded. A subtle shift has been noticed in policies followed by some countries in the world, especially the emerging powers. India, China, UAE, Saudi Arabia. These countries are not towing the American and European line in Toto in formulating their foreign policy in this crisis. Experts are saying that there has been so much disruption in the last two years due to the pandemic, that countries are today more interested in securing their national interests than seen to be towing the western line.

Notwithstanding the human rights violations and the nullifying of the sovereignty of Ukraine, governments which are already besieged with their domestic problems because of the pandemic are not impressed by this call to force even more hardships on their people. This gives rise to the argument that perhaps the double whammy of the pandemic and now the war has changed the mindset in some political circles of the globe. The geo-strategic views are not seen in black and white. Some grey areas are now visible. Countries like India are not willing to take sides in this conflict.

US foreign policy has become somewhat weak and less effective in the last few years. The US had pressurised the leader of Saudi Arabia Mohammed Bin Salman on the issue of the assassination of Jamal Khashoggi terming it as human rights violation by the regime. Saudi Arabia now has refused to tow the American line on its Russia-Ukraine policy. It has also refused to increase the production of oil to shore up the rising fuel prices because of the conflict, even after a visit by British PM Boris Johnson. Moreover, Saudi Arabia may accept payments in Yuan for the oil they sell to China. India also may enter into a Rupee-Rouble trade agreement with Russia and a Rupee-Rial agreement with Iran. The dollar hegemony has been challenged.    

China and Russia have signed a no limits treaty which entails cooperation between the two countries in the face of trouble with the west. Thus, there are a lot of challenges to the power of the US. This unipolarity (US domination) in world geopolitics may not last long as countries like India and China assert themselves regarding their own national interests.

A new world order may emerge in the coming decade. The dynamics of this new world order cannot be predicted at this juncture. But geopolitics will see some profound and fundamental changes in the near future.    

The Ukraine Crisis and the Ripple Effect

 

It has been some times since the build-up to the current stalemate in Ukraine reached its zenith. Actually nothing has really moved on the ground except for the troops of Russia. The problem with modern crises of this kind is that the involved parties are seldom enthusiastic about taking the conflict to its logical end. This is not hard to understand. For one thing, modern wars can never be won convincingly. Even for a superpower like America getting involved in a conflict brings a lot of problems in its wake, some of them entirely unforeseen. Not the least is collateral damage.

Modern wars have serious repercussions, most of them unpleasant. Domestic industry may get a  boost and employment levels shoots up. However, everything else goes south. The stock market crashes due to uncertainties, the fuel prices rise due to speculation, trade embargoes and sanctions kick in. As a result of this the economy takes a hit.

The Ukraine crisis has its roots in history. Russia has always claimed Ukraine as its own since the time it was ruled by the czars. In the interim period leaders like Stalin and Khrushchev tried to consolidate Russian influence over Ukraine. Stalin even orchestrated a famine in Ukraine in which millions died. Russia also sent some of its own people to Ukraine as immigrants. As a result almost one fourth of the Ukrainians speak Russian, especially in the eastern part. These ethnic Russians have an affinity for Russia and are even willing to merge their geographical areas with Russia.

We cannot ignore the fact that the military-industrial complex in America is in search of fresh pastures after their successful sojourn in Afghanistan. America’s ruling elite are heavily invested in this complex. They were facing the question ‘after Afghanistan, what? The answer was provided by the Ukraine crisis.   

The problem with going to war is that Russia with all its troops and weapons will come out worse in this conflict. Its economy is weak. Foreign investment has all but dried up. Though it looks like the west holds all the cards here, it may not be all that simple. Concerted action by NATO may be difficult. Europe depends heavily on Russian gas. This may not change much in the near future as Russia needs the dollars, this is more so in face of looming sanctions.  Even if Russia takes over Ukrainian territory, it will not be able to hold it. Russia lacks the economic resilience for a drawn out war and occupation.

Getting concessions from the west may not be easy. Putin cannot afford to overplay his hand. On the other hand he cannot make empty threats for fear of losing credibility.

The world has polarized on this issue. The response has been somewhat piecemeal. In Europe, Germany only now, has agreed to send weapons to Ukraine and arm itself. China and India have their take on this issue. India finds its strategic space getting restricted due to its dependence on Russian arms. China will critically view a similar campaign against Taiwan depending on the response from the west to this attack.

Any weakness shown by the democracies will have a cascading effect on all the border disputes which China has with its neighbours. China could forcibly try to take over territories it claims from Nepal, Bhutan, India, Mongolia, Kirghizstan, etc. It would further exploit this weakness by blatantly ignoring all international treaties.

Along with NATO, the Quad will also be tested. The democracies will have to be careful how they react to this crisis. This is a testing time for the free nations as Russia may also aim for a regime change in Ukraine.

Ukraine leadership has failed in its diplomacy. Nobody has come forward and said they will send troops. Some material help has been promised by Europeans and the Americans, but compared to the crisis engulfing Ukraine, it’s grossly inadequate.

Moreover it is very easy to be hundreds of miles away and advise others to fight. The way America got out of Afghanistan has not impressed anyone. Ukraine leadership should keep their national interest first if they have to tide over this crisis.

According to some experts the west it seems was pushing Russia to the wall. NATO membership has expanded and now will touch the borders of Russia, if Ukraine becomes a member. What Putin wants to achieve is still unclear. The signals are that he wants Ukraine to capitulate without conditions. The nuclear threat by him is rather of an overkill and is rightly being overlooked by America. The more time he spends in Ukraine, the more he stands to lose especially as there are signs of restlessness among his own people as the sanctions have started to bite. And more are on the way. Putin will do well to end this conflict ASAP.

The free world is not united in its response to this crisis. Every country is looking at its own national interests, however, all should know, that a show of weakness due to lack of cohesion by the free world will put the entire rules-based order in jeopardy.  

Times, they are a changin'

 

The pandemic has caused a huge change in the way we deal with life in general. So much has changed in the last two years. The way we work, the way we play, the way we deal with people. Jobs have changed as companies have had to change the way they function. Normally these changes would have taken at least a decade or more to be adopted. But times have been anything but normal in the last three years or so.

It is not that technology was not being developed before the pandemic. But we are adapting much faster. People are more ready to assimilate new technology in their lives and their daily routines because of the pandemic. Why? Many things which we took for granted before the pandemic were disrupted as the virus spread around the world. The simple routine of going to the market to buy necessities or to go to one’s office for work became impossible.  In this case technology came to the rescue. This was not rocket science. Simple things like working online, and making digital payments or ordering groceries became routine. It was a paradigm shift. It is not that people were not doing it earlier. It is that the adoption to the new ways was happening much faster. The transition period is much shorter now.

The paradigm shift happened not only in adoption of new technology, but a complete change of attitude was witnessed the world over. People wanted to get over this disruption of their lives as quickly as possible.  They were ready to do anything as long as their actions kept them away from the dreaded disease and helped them get on with their lives.

The world in general slowed down as the lockdowns hit, but some businesses took off. Online delivery services saw a rapid rise demand. Healthcare food, medicines and allied industries suddenly saw a big uptick in their sales.

It is predicted that technology will leapfrog in the next decade and we can see some telltale signs today. Nano technology is on the verge of takeoff. Combined with AI and ML, it will revolutionise its applications fundamentally.

Similarly many technologies under development have the potential to change the way we live, work, travel and do business. Electric vehicles will be come into use in a big way in the near future. Battery technology is undergoing a revolution. Li-ion, Aluminum and Sodium Ion batteries may find use in the new electric vehicles currently on the drawing board. Digital payments are already being used on a large scale and digital currencies are not far behind. The Reserve Bank of India recently announced that it will introduce the digital Rupee in the near future.

The pace of innovation has accelerated over the course of the pandemic, or so it seems. Many technology companies have made money during this period despite the slowdown in economic activity in general. This does show that new technology is more readily being assimilated in our everyday routine.

They say predicting the future is dangerous. However one thing can be safely predicted. It does not matter if this pandemic lasts longer or mankind is hit by another one, we are going to see some rapid and profound changes in the way this world is run.