Latest news with #ReciprocalDefenceProcurementAgreement
Mint
4 days ago
- Business
- Mint
For Indian defence firms, a special US deal is on the way
India and the US are working on a landmark deal that would open up each country's defence purchase market to the other, marking a significant step forward in their strategic relationship, two people aware of the development said. The Reciprocal Defence Procurement Agreement (RDPA), if finalized, would give Indian companies direct access to the world's largest defence market worth $850 billion, and enable their American counterparts to tap into India's manufacturing and technology sector. This would also make India the 29th signatory to the US framework, and the only Asian signatory after Japan. An official announcement is likely within a year, but it would also depend on factors including the ongoing trade negotiations with the US, the people cited above said on the condition of anonymity. 'In light of the current geopolitical environment, especially after Operation Sindoor, India sped up talks with the US for a full-fledged RDPA. The rationale has been that while there have been many interim agreements opening up the two markets for strategic technologies, most of them still require approvals from the US Department of Defence, as well as other paperwork under foreign affairs, export and import controls, and so on. Both nations recognize the need for an RDPA, and talks are now closing in at the final stage," one of the two people said. Smoother process An RDPA will enable Indian makers of defence components and technologies such as spy satellites to sell directly to the US. Companies can choose to partner closely with US entities, without needing express approvals of the two governments, currently a cumbersome affair. Talks for an RDPA happen in the backdrop of recent American tariffs on Indian goods, and ongoing talks for a bilateral trade agreement. Experts said that with the RDPA in place, India's defence firms, which exported a record ₹23,622 crore of goods in FY25, are likely to see a major fillip. 'For India, even with the Security of Supply Arrangement (SOSA) signed in August last year, the current agreements and bureaucratic deals have kept multiple roadblocks in place. For the US, India has so far been a Soviet-heavy defence market—getting access to it will be key as in the current geopolitics, India is a crucial ally for the US in the East," said Vivek Mishra, deputy director for strategic studies at global think-tank, Observer Research Foundation. 'Think of this as a deal that would give India a massive defence manufacturing market from the US to cater to, via partnerships signed under the ambit of the RDPA. Doing so is crucial for both countries right now, and has for long been the logical step forward for the ties of the two nations," Mishra added. Queries sent to the holding companies of Kalyani Strategic Systems and Alpha Design Technologies, as well as the Mahindra Group and Indian-American space-tech startup Pixxel remained unanswered. An email sent to the Ministry of Defence also did not receive responses. Explaining how the deal would work, the second official cited above said, 'The current International Traffic in Arms Regulations (ITAR) rules are a Department of State affair in the US, which seeks to control access of US technology in foreign nations. The Strategic Trade Authorization, meanwhile, comes under the Department of Commerce—and establishes export control to prevent access of technology outside of the US. RDPA, under the US Department of Defence, will primarily establish the ability for Indian defence entities to view and apply for US defence tenders, and vice-versa." Building on ITAR The deal will build on existing Indo-US agreements in defence and technology, such as the joint initiatives announced by prime minister Narendra Modi and US president Donald Trump, during the former's US visit in February. These include a review of the existing ITAR, which industry experts said is still a bureaucratic and restrictive process. 'The leaders announced plans to sign this year a new ten-year Framework for the US-India major defence partnership in the 21st century… (and) determined that the US would expand defence sales and co-production with India to strengthen interoperability and defence industrial cooperation," a statement by the Ministry of External Affairs said on 13 February. Bharat Forge's Kalyani Strategic Systems, the Adani group's Alpha Design Technologies, Centum Electronics and others currently rely on ITAR clearances to supply defence technologies to US entities. Some examples include Kalyani's artillery cannons deal with AM Design, and Mahindra Group's partnership with Anduril for autonomous marine systems, both announced in February this year. "This would be a massive push for the Indian defence market, which is currently worth around $80 billion. The US, meanwhile, has an $850-billion defence market. India's aspiration is to scale up its defence exports to $6 billion by 2030. Even if Indian private firms can capture 1% of the US market, this represents a massive business opportunity for them," the second official added. ORF's Mishra also said that for India, the US is the biggest target market. "We do have a bilateral defence agreement with France, but not with the UK. This means that the US is a one-of-a-kind target for Indian private firms, and an RDPA will majorly boost the domestic market," he added. Streamlining The lack of a streamlined process has pushed startups, such as Bengaluru-born Pixxel and Digantara, to set up independent US entities to pursue defence contracts with the National Aeronautics and Space Administration (Nasa) and the Defense Advanced Research Projects Agency (Darpa) in the US. The process, however, has meant that defence supply deals remain far and few in nature. 'The RDP Agreement would assist the Indian companies to develop internationally acceptable standards and certifications in order to access the massive US defence market, which will in turn also increase their competitiveness and acceptability in other defence markets," said Shailender Arya, senior advisor, defence and national security at global policy advocacy firm, The Asia Group.
Economic Times
06-05-2025
- Business
- Economic Times
How can India ‘Make for the World'? Unlocking its defence export potential
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel India today stands at an inflection moment in its quest to become a global defence manufacturing powerhouse. The vision of transitioning from ' Make in India ' to 'Make for the World' is bold, but the path is fraught with challenges that demand urgent attention. Are we ready to seize this opportunity? Though India has a right mix of competencies and competitiveness, the answer hinges on addressing five critical issues: aligning policy, industry, and diplomacy for export success; need to manufacture high-tech products, competitiveness and ensuring our industry meets global standards; increasing investments in strategic R&D building trust and resilience: evolving from a mere manufacturer to a trusted, low-cost partner in global security and lastly, building confidence, sustainability, and growth of small players by ensuring long term supply arrangements with technical support, especially for the home-grown SMEs. With the right strategy, and road-map in place, India can transform its defence sector into a 'go to' source for countries in need, but the clock is defence journey is one of remarkable progress. Decades ago, we were heavily reliant on imported platforms and weapons. Today, organisations like Defence Research and Development Organisation (DRDO), Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), and Bharat Forge have built a robust ecosystem for indigenous manufacturing. Last year, defence production soared to ?1.27 lakh crore, with exports accounting for nearly ?21,083 crore in FY 2023-24 which is a clear evidence of growing non-aligned geopolitical stance is a unique asset, making us a palatable partner for many nations. This neutrality can be leveraged to promote our defence products, but only if we better align our policies to promote industries and get them market access through adroit commercial diplomacy. For instance, Indian companies are already supplying components to countries like United States, Armenia and France proving that quality can attract global buyers. However, scaling this requires a cohesive strategy: Despite continuous initiatives to strengthen its defence-industrial foundation, India still relied heavily on foreign suppliers accounting for 9.8% of global arms imports between 2019 and 2023 highlighting a persistent strategic dependency in its defence procurement. The government's efforts to revise the Defence Acquisition Procedure and signing of Security of Supply Agreement (SOSA) or negotiating Reciprocal Defence Procurement Agreement with the U.S. are all steps in the right direction, but we must ensure that these policies and agreements translate into swift, tangible our siloed approach in governance, cloaked in secrecy, limits collaboration with academia, startups, and industry. The higher authorities do not market or allow any information in the press or in public domain which limits the scope of good R& DRDO's Prototype-Centric Project (PCP) model, which involves industry from project inception, is a positive step, but we must dismantle silos entirely. Without alignment of the ecosystem across policy, industry, and diplomacy to ensure long-term export success, our export ambitions risk remaining hurdle is whether India's defence industry can deliver to global standards in quality, scale, timelines, and pricing. While we have shifted from importing to manufacturing, critical technologies like aero-engines, anti-missile systems, advanced UAVs and fighter jets of 5th generation and above still rely on foreign expertise. India exports small components to the U.S. and France, however exporting complete systems like multi-role light attack helicopters - Prachand and Akash missiles face hurdles in competitive markets due to the dominance of established exporters (US, Western Europe and Russia) and the need for proven reliability. Foreign buyers prioritise systems with established operational histories, a challenge for India's relatively new indigenous the flip side collaborative models with foreign OEMs for co-design and co-development are gaining traction, the notion that 'nobody will transfer us the technology' is only half-true. What went absolutely right here is the C-295 programme, a very tangible example of Government of India's vision as it was the first ever programme given to Indian private aerospace industry to do what was never done before. The programme is a landmark collaboration between Airbus (Spain), Tata Advanced Systems Limited (India), and Indian Defence Public Sector Undertaking (DPSUs). Similarly, success of BrahMos, supersonic cruise missile developed jointly by DRDO and Russia's NPO Mashinostroyeniya and even General Atomics' partnership with Bharat Forge to manufacture main landing gear components, subassemblies, and assemblies for remotely piloted showcases how private industry and MSMEs can build a deep supply chain for aircraft production in India. Yet, the industry's evolution from 'build-to-print' to 'design-to-development' is slow. Lengthy acquisition cycles, often five to seven years, render technologies obsolete before they reach the market, undermining both industry and armed forces. Speed is thus paramount. Simplifying procurement, fostering urgency, and ensuring after-sales support are critical to earning global trust. Without these, India risks being outpaced by competitors who deliver faster and third issue is the urgent need for strategic R&D. This is going to build internal capacity, increase patents leading to reduced dependency on global supply chains. Technologies like quantum communication, GPS-denied navigation, and long-life batteries are redefining defence landscapes. Yet, India's R&D spending of 3.9% of the defence budget lags far behind the 10-15% allocated by nations like the U.S. and promise to increase this to 10% over five years is encouraging, but funding alone isn't enough. A cultural shift is needed to embrace risk. As rightly put by Dr Samir V. Kamat, Chairman of the Defence Research and Development Organisation (DRDO), the fear of failure, reinforced by CAG audits that penalise unsuccessful projects, stifles innovation. R&D is inherently uncertain. Citing the America's Defense Advanced Research Projects Agency's (DARPA) willingness to invest in high-risk, low-reward R&D which proves that failure is part of progress. We must adopt similar flexibility, closing underperforming projects without fear of fourth challenge is transitioning from a supply chain participant to a reliable, low-cost partner in global security. India's maritime heritage and strategic location in the Indian Ocean position us to offer naval capabilities to smaller nations through forums like QUAD and BIMSTEC. Yet, our shipbuilding industry contributing less than 1% to global tonnage, pales beside China's 51% comfortable with Navy and Coast Guard orders, have little incentive to diversify into commercial vessels like bulk carriers or LNG tankers. Declaring shipbuilding an infrastructure sector could unlock investments, enabling public-private partnerships and foreign a critical missing piece in achieving the ambitious target of ?50,000 crore in defence exports by 2029 lies in strengthening the capacities of SMEs and startups. This can be effectively addressed by placing consistent, long-term orders spanning five years and more through these enterprises. Such a commitment and assured purchase would provide the stability they need to invest in machinery, scale production, and grow sustainably, rather than risk closure within a year of future beckons, but the path forward demands clarity, courage, and believe that India is poised to 'Make for the World,' but the window of opportunity is narrow. By aligning our ecosystem, meeting global standards, scaling our SMEs, investing in futuristic technologies, and positioning ourselves as a trusted security partner, India will be able to transform from a buyer's nation to a builder's authors work for CUTS International, a 41 year old global NGO working on public policy research and advocacy issues.
Time of India
06-05-2025
- Business
- Time of India
How can India ‘Make for the World'? Unlocking its defence export potential
Continue to video 5 5 Next Stay Playback speed 1x Normal Back 0.25x 0.5x 1x Normal 1.5x 2x 5 5 / Skip Ads by Live Events India today stands at an inflection moment in its quest to become a global defence manufacturing powerhouse. The vision of transitioning from ' Make in India ' to 'Make for the World' is bold, but the path is fraught with challenges that demand urgent attention. Are we ready to seize this opportunity? Though India has a right mix of competencies and competitiveness, the answer hinges on addressing five critical issues: aligning policy, industry, and diplomacy for export success; need to manufacture high-tech products, competitiveness and ensuring our industry meets global standards; increasing investments in strategic R&D building trust and resilience: evolving from a mere manufacturer to a trusted, low-cost partner in global security and lastly, building confidence, sustainability, and growth of small players by ensuring long term supply arrangements with technical support, especially for the home-grown SMEs. With the right strategy, and road-map in place, India can transform its defence sector into a 'go to' source for countries in need, but the clock is defence journey is one of remarkable progress. Decades ago, we were heavily reliant on imported platforms and weapons. Today, organisations like Defence Research and Development Organisation (DRDO), Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), and Bharat Forge have built a robust ecosystem for indigenous manufacturing. Last year, defence production soared to ?1.27 lakh crore, with exports accounting for nearly ?21,083 crore in FY 2023-24 which is a clear evidence of growing non-aligned geopolitical stance is a unique asset, making us a palatable partner for many nations. This neutrality can be leveraged to promote our defence products, but only if we better align our policies to promote industries and get them market access through adroit commercial diplomacy. For instance, Indian companies are already supplying components to countries like United States, Armenia and France proving that quality can attract global buyers. However, scaling this requires a cohesive strategy: Despite continuous initiatives to strengthen its defence-industrial foundation, India still relied heavily on foreign suppliers accounting for 9.8% of global arms imports between 2019 and 2023 highlighting a persistent strategic dependency in its defence procurement. The government's efforts to revise the Defence Acquisition Procedure and signing of Security of Supply Agreement (SOSA) or negotiating Reciprocal Defence Procurement Agreement with the U.S. are all steps in the right direction, but we must ensure that these policies and agreements translate into swift, tangible our siloed approach in governance, cloaked in secrecy, limits collaboration with academia, startups, and industry. The higher authorities do not market or allow any information in the press or in public domain which limits the scope of good R& DRDO's Prototype-Centric Project (PCP) model, which involves industry from project inception, is a positive step, but we must dismantle silos entirely. Without alignment of the ecosystem across policy, industry, and diplomacy to ensure long-term export success, our export ambitions risk remaining hurdle is whether India's defence industry can deliver to global standards in quality, scale, timelines, and pricing. While we have shifted from importing to manufacturing, critical technologies like aero-engines, anti-missile systems, advanced UAVs and fighter jets of 5th generation and above still rely on foreign expertise. India exports small components to the U.S. and France, however exporting complete systems like multi-role light attack helicopters - Prachand and Akash missiles face hurdles in competitive markets due to the dominance of established exporters (US, Western Europe and Russia) and the need for proven reliability. Foreign buyers prioritise systems with established operational histories, a challenge for India's relatively new indigenous the flip side collaborative models with foreign OEMs for co-design and co-development are gaining traction, the notion that 'nobody will transfer us the technology' is only half-true. What went absolutely right here is the C-295 programme, a very tangible example of Government of India's vision as it was the first ever programme given to Indian private aerospace industry to do what was never done before. The programme is a landmark collaboration between Airbus (Spain), Tata Advanced Systems Limited (India), and Indian Defence Public Sector Undertaking (DPSUs). Similarly, success of BrahMos, supersonic cruise missile developed jointly by DRDO and Russia's NPO Mashinostroyeniya and even General Atomics' partnership with Bharat Forge to manufacture main landing gear components, subassemblies, and assemblies for remotely piloted showcases how private industry and MSMEs can build a deep supply chain for aircraft production in India. Yet, the industry's evolution from 'build-to-print' to 'design-to-development' is slow. Lengthy acquisition cycles, often five to seven years, render technologies obsolete before they reach the market, undermining both industry and armed forces. Speed is thus paramount. Simplifying procurement, fostering urgency, and ensuring after-sales support are critical to earning global trust. Without these, India risks being outpaced by competitors who deliver faster and third issue is the urgent need for strategic R&D. This is going to build internal capacity, increase patents leading to reduced dependency on global supply chains. Technologies like quantum communication, GPS-denied navigation, and long-life batteries are redefining defence landscapes. Yet, India's R&D spending of 3.9% of the defence budget lags far behind the 10-15% allocated by nations like the U.S. and promise to increase this to 10% over five years is encouraging, but funding alone isn't enough. A cultural shift is needed to embrace risk. As rightly put by Dr Samir V. Kamat, Chairman of the Defence Research and Development Organisation (DRDO), the fear of failure, reinforced by CAG audits that penalise unsuccessful projects, stifles innovation. R&D is inherently uncertain. Citing the America's Defense Advanced Research Projects Agency's (DARPA) willingness to invest in high-risk, low-reward R&D which proves that failure is part of progress. We must adopt similar flexibility, closing underperforming projects without fear of fourth challenge is transitioning from a supply chain participant to a reliable, low-cost partner in global security. India's maritime heritage and strategic location in the Indian Ocean position us to offer naval capabilities to smaller nations through forums like QUAD and BIMSTEC. Yet, our shipbuilding industry contributing less than 1% to global tonnage, pales beside China's 51% comfortable with Navy and Coast Guard orders, have little incentive to diversify into commercial vessels like bulk carriers or LNG tankers. Declaring shipbuilding an infrastructure sector could unlock investments, enabling public-private partnerships and foreign a critical missing piece in achieving the ambitious target of ?50,000 crore in defence exports by 2029 lies in strengthening the capacities of SMEs and startups. This can be effectively addressed by placing consistent, long-term orders spanning five years and more through these enterprises. Such a commitment and assured purchase would provide the stability they need to invest in machinery, scale production, and grow sustainably, rather than risk closure within a year of future beckons, but the path forward demands clarity, courage, and believe that India is poised to 'Make for the World,' but the window of opportunity is narrow. By aligning our ecosystem, meeting global standards, scaling our SMEs, investing in futuristic technologies, and positioning ourselves as a trusted security partner, India will be able to transform from a buyer's nation to a builder's authors work for CUTS International, a 41 year old global NGO working on public policy research and advocacy issues.
