Wednesday, 21 February 2018

British defence industry body downs shutters in India


British Chief of General Staff, Nick Carter, in Delhi last week

By Ajai Shukla
Business Standard, 21st Feb 18

Even as New Delhi and London talk up the importance of their “strategic partnership” and exchange top-level political visits, the UK defence industry is thinning out from India.

Business Standard learns that the UK defence industry body ADS Group (the acronym encompasses “aerospace, defence, security and space”), which represents over a thousand defence firms, is shutting down its India office from March 31.

Since 2002, when ADS Group opened an office in New Delhi, it has been only its second foreign station after Toulouse, France. In 2009, ADS Group opened another office in Bangalore. “With its massive defence budget, a booming civil and military aviation market, and ambitious homeland security plans, India is a country one cannot afford to miss”, says the company websight even today.

That enthusiasm has dramatically waned. While no public announcement has yet been made, ADS Group member companies have been informed about the closure of the India office. So have Indian defence companies that joined the British industry body, hoping that would help them connect with small, UK-based, high technology companies, which they could potentially ally with or even buy out.

One of those Indian members was the Pune-based Kalyani Group, which confirms its membership lapsed as it became evident that ADS Group was pulling down the shutters in India.

After March 31, only a handful of large British manufacturers will retain a presence in India – large firms like BAE Systems, Rolls-Royce and Cobham, which do enough business in India to justify maintaining company offices.

The UK government will continue its support, though, with defence products ranking amongst Britain’s top three exports. This would be done through the UK Department of International Trade, which operates from the British High Commission in Delhi.

Even though India remains the world’s largest arms importer, much of New Delhi’s capital spending goes on government to government buys, or single vendor procurements from global defence giants. “Make in India”, which is what small British defence technology firms would gain business from, has always lagged the rhetoric, even after 2014, when the National Democratic Alliance (NDA) government portrayed defence manufacture as a key driver of its “Make in India” initiative.

It is understood that Paul Everitt, who heads ADS Group, has concluded that India is a difficult market that does not warrant the expense of a full-time office and staff.

Asked why it was closing its India office, ADS Group did not furnish a response.

Defence industry analyst, Major Karun Khanna (Retired), points out that most of UK defence industry consists of two big primes – BAE Systems and Rolls-Royce – which have their own India offices. With large US and French defence corporations buying into British defence firms in recent years, there is simply not enough UK defence industry left to justify industry body representation in India.

Other industry analysts argue that the high cost of British defence products is forcing its industry towards the exits. In contrast, US, Israeli and French defence firms are enlarging their presence in India, having developed low-cost production models that operate on wafer-thin margins.

In contrast to the bleak industry picture, India-UK political engagement is vibrant. Prime Minister Narendra Modi visited the UK in November 2015, which was reciprocated by his counterpart, Theresa May, a year later. Defence Minister Nirmala Sitharaman was to visit the UK this week, which was postponed after the terrorist attack in Jammu last week.

The British and Indian militaries do joint training together. Officers train at each others’ establishments. A “Defence Consultative Group Meeting” is held each year at the defence secretary level. Intelligence exchanges are robust.

The next opportunity for defence interaction would be the Defexpo India 2018 in Chennai in April, which the UK minister for defence production is likely to attend.

4 comments:

Anonymous said...

Nominally, UK is the 4th largest arms supplier to India (according to SIPRI 2007-16). Looking at SIPRI Trade Registers though, the trade is primarily restricted to Hawk Trainers and the legacy British aircraft like the Jaguars. The trade volume pattern (more or less even over the decade) also suggests that the sales appear to be restricted to consumables and spares for the legacy equipment rather than new purchases. Couple this data with the fact that India purchased BAE's M-777 Howitzer under a FMS deal with the US shows that India-UK defence relationship is nothing to crow about. No wonder the Brit Trade Group wound up their offices in India. I'd be surprised if India-UK defence trade ever grows; given the distasteful memory of UK joining the US in sanctioning India. The US, is now atleast strategically aligned with India vis-a-vis China and brings its geopolitical heft the table; UK on the other hand, to use the words of I K Gujral, remains a third power and of no use to India.

Anonymous said...

If UK is a third power. What does that make India, fifth/sixth level power at best? Bearing in mind that the Brits removed Jaguars from service over a decade ago and IAF will keep them for another 2 decades and still needs parts from the UK. LOL.

Maybe the Brits should limit the number of Indians coming here but then again we like all your rich to park their money here :-). Pakistan is morethan capable of holding you guys down.

Johnny

Vikas Dangi said...

Under Modi, imports of defence items have been drastically reduced. UK was eager to sell its Hawk engine but India refused to buy and started HTFE 25 which is progressing well. Similarly, many UK items were rejected as ToT was refused.

India needs no strategic partnership if there is no technology transfer. UK can simply get lost. India has its own indigenous research and REAL collaboration with Israel and Russia

Anonymous said...

UK is no longer manufacturing anything not even cars. Their own ships and Air Force are in dire straits.
To think once upon a time, sun never set in British empire !