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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84S00927R000200090005-9
• Release Decision: RIPPUB
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• Document Page Count: 31
• Document Creation Date: January 12, 2017
• Document Release Date: June 21, 2011
• Sequence Number: 5
• Publication Date: December 1, 1983
• Content Type: REPORT

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Directorate of
Intelligence
and Prospects
India: Arms Production
A Research Paper
NESA 83-10338
December 19.93
Copy 2 9 3
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Secret
NESA 83-10338
December 1983
Directorate of Secret
Intelligence
and Prospects
India: Arms Production
Operations.
Office of Near Eastern and South Asian Analysis. It
was coordinated with the Directorate of
This paper was prepared by
Comments and queries are welcome and may be
directed to the Chief, South Asia Division, NESA, on
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secret
India: Arms Production
and Prospects F_ 25X1
Key Judgments New Delhi has grandiose ambitions to develop a defense industry capable
Information available of producing the advanced weapons required to satisfy the needs of its more
as of 1 November 1983 than 1-million-man armed forces. These ambitions, however, exceed
was used in this report.
indigenous production capabilities, now and for the near term.
India's defense industry, which has developed into one of the largest among
the Third World countries, produces weapons ranging from basic small
arms to relatively modern fighters and warships. Even so, India's military
leadership is dissatisfied with the quantity and quality of weapons manu-
factured, and New Delhi must import arms to modernize its forces and
keep them combat ready.
India's industry lacks the advanced manufacturing technology and equip-
ment as well as the skilled labor force necessary to meet, solely through its
own efforts, the military's requirements for modern arms. Major deficien-
cies are in the fields of metallurgy, aeronautics, missile guidance systems,
electronics, and engines.
New Delhi will strive to expand and modernize its defense industry
throughout the decade with a goal of achieving self-sufficiency in arms
production. A steady improvement in capabilities will permit the country to
provide an increasing portion of its own military requirements.
Complete self-sufficiency in arms production, however, is beyond India's
reach. Advances in the highly industrialized nations will continue to widen
the technological gap despite Indian efforts to narrow it. Imports, licensed
production, and technical assistance from leading arms producers will
remain essential for equipping the armed forces with modern weapons and
maintaining combat readiness.
India will continue to make limited purchases of high-technology items
from the West for which adequate substitutes are not available from the
USSR. Such purchases also serve to press the Soviets to grant India more
advanced arms on favorable terms. Indian acquisitions of Western arms
and technology are more likely to involve West European than US
suppliers because of less restrictive licensing arrangements and export
controls.
Secret
NESA 83-10338
December 1983
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Indian purchases of advanced Western weaponry and manufacturing
technology could result in a diversion of classified information to the
USSR. New Delhi's close military ties with Moscow include the presence
in India of several hundred Soviet technicians in Indian defense industries
India will rely more heavily on the USSR than in the past for upgrading
and expanding its defense production capabilities because New Delhi can
obtain more advantageous financial and technical concessions from the
USSR than from Western nations. In addition to easier credit terms, the
Soviets appear to be more willing to grant India the rights to assemble and
produce modern weapons and have agreed to give New Delhi preferential
treatment in the transfer of advanced Soviet technology abroad.
Increased Soviet cooperation in India's defense industries will deepen the
existing military relationship between New Delhi and Moscow and may
even lead to closer Indian relations with Warsaw Pact countries. The likely
conclusion of a deal for India to manufacture aircraft parts for the USSR
would further strengthen the military ties between the two countries.
Moreover, only the selling of these parts to Moscow offers the near-term
potential for New Delhi to make significant gains in revenues from its
military exports, which probably would be used largely to finance addition-
al weapons purchases from the Soviet Union.
A deepened military relationship would, at the very least, result in a larger
Soviet presence in India and more training of Indian military personnel in
the USSR. It could also lead to greater Indo-Soviet intelligence coopera-
tion in monitoring developments in Pakistan, China, and the Indian Ocean.
25X1
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secret
Key Judgments
Defense Industry
Status of Technology
Current Capabilities and Shortcomings 1
Technology Transfer 4
A. Indian Defense Plants and Major Products
B. Major Defense Industry Programs
C. Shortcomings in India's Defense Industry
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Indian Arms Production Plants, 1983
Afghanistan `'%-.
KAE;u, Cease pro ltna?
ISLAMABAD* I
Pakistan
Weapons Group
.eit c. T 4 II iit
China
Lucknow
Kanpur ?6
p /y 11 Khamaria
~y ly Jabalpur' }t
''Chinese '"j
line of
\cont[ol JI
lndian
claim
Debts Dan
11
NEW DELHI*.
? Ghaziabed
/yy~ 'ta`al? I n d?/~yi a
Varangaon to
? Ambajhri. ~+}+~Mandate
Nasik Chanda
Cn
Pune
Kirkee Medak?
/y . Secunderabiid
j 11 Hyderabad*
Bangalore
LAKSHADWEEP
(India)
N* ? N .
Korwa
Jamshedpur.
Bengal
ANDAMAN,il
ISLANDS
(India) ? ?
NICOBAR?
ISLANDS 0
(India) 0
Cossipore
CaO
Bangladesh
DH#A.KA /
Bay of
Boundary representation is
riot necessarily authoritative.
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Secret
India: Arms Production
and Prospects F__]
Defense Industry
New Delhi views domestic production of arms as a
vital component of its military capabilities and a key
to the country's long-term security, according to
public statements by Prime Minister Gandhi and
senior Indian defense officials. Gandhi recently told
the press that India needs to adopt the latest technol-
ogy in increasing its military production. Such state-
ments, coupled with the construction of new facilities
and attempts to expand military research and devel-
opment efforts, indicate that the government assigns a
high national priority to the development of a defense
industry capable of producing modern weapons.
Through the investment of considerable resources, the
Indian arms industry already is one of the largest in
non-Communist Asia, ranking second only to Japan.
Although the industry can satisfy a sizable portion of
the armed forces' requirements, senior Indian defense
officials publicly stress the need for domestic produc-
tion to provide a still larger share of the equipment
needed for India's more than 1-million-man military
According to published government reports, the Min-
istry of Defense through the Department of Defense
Production directs and coordinates the production of
nine large public-sector corporations and 33 ordnance
factories, two of which are currently under construc-
tion. (A list of the facilities and their major products is
provided in appendix A.) These 42 major defense
facilities are widely dispersed geographically (see
map) and employ some 270,000 people, according to
Ministry of Defense publications. The reports indicate
that these firms currently produce some $2 billion in
goods annually-about 1 percent of India's gross
national product-of which roughly half comes from
the nine public-sector undertakings. Approximately
one-third of total output comprises nonmilitary goods,
which permits the factories to use excess capacity for
reducing fixed overhead costs of their military pro-
duction programs and to maintain employment levels.
India's defense industry produces a range of weapons
from basic small arms, artillery, and armored vehicles
to more sophisticated fighters and guided-missile frig-
ates (see table 1 and appendix B for more detail). The
industry appears to us to lack a sufficiently advanced
technological base to meet, solely through indigenous
efforts, many of the armed forces' requirements for
modern arms, particularly for air and naval systems.
Our research indicates that no major Indian-
manufactured weapon is completely original, and all
have at least some imported components. Only
through foreign licensing arrangements and technical
assistance have the Indians been able to compensate
for their limitations in designing, developing, and 25X1
producing high-technology armaments, subsystems,
and components.
Status of Technology
Current Capabilities and Shortcomings
India, by Third World standards, has made substan-
tial progress over the last two decades in expanding
and improving its defense industry, but major defi- 25X1
ciencies remain in the industrial base, the levels of
manufacturing technology, and the availability of
skilled manpower. The weakest areas, according to
our research, are in the fields of metallurgy, aeronau-
tics, missile guidance systems, electronics, and en-
gines. (See appendix C for a more detailed discussion
of the shortcomings in arms production.) Although the
Indians appear capable of designing and producing a
prototype of a weapon, we believe they lack the
capability to produce large quantities of modern arms
with a high reliability in performance. The problem is
becoming more acute as India's arms industry at-
tempts to move from a 1950s and 1960s technological
base to one of the 1970s, which demands much
greater precision in manufacturing to ensure weapons
reliability.
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Table 1
India: Production of Major Weapon Systems
Equipment
Origin of
Technology
Date of Initial
Production
End of
Production
Estimated
Number Built
Ajeet
UK
1976
1982
80
FL
USSR
1966
1973
196
M
USSR
1973
1981
160
bis
USSR
1977
Continuing
100
MIG-27
USSR
1984
Unknown
0
Jaguar
UK
1982
Continuing
5
Cheetah
France
1972
Continuing
170
Chetak
France
1965
Continuing
300
Vijayanta
UK
1966
1983
1,600
MBT-80
India/West
Germany/UK
Unknown
Unknown
1
T-72
USSR
1984/85
Unknown
0
105-mm towed
gun
MK I
UK
1964
Continuing
800
MK II
UK
1983
Continuing
10
130-mm SP
gun
USSR/UK
1983
Continuing
15
Remarks
Improved version of the British Gnat, a light
fighter built under license from Hawker-Siddeley
from 1950 to 1974.
Assembled and produced under license.
Assembled and produced under license.
Total of 250 to be assembled and produced under
license. Entered series production in January
1983 after assembling 90 from kits.
Now tooling up for production under license.
Scheduled production run of about 200. Initial
aircraft probably will be assembled from kits.
Total of 76 to be assembled from kits under
license.
French Lama helicopter built under license. Most
parts made in India.
French Alouette III helicopter built under license.
Most parts made in India.
Tank production scheduled to stop in December
1983. We believe line will undergo modification
to produce through retrofitting an upgraded Vi-
jayanta with better armor protection, a more
powerful engine, and improved fire-control and
night-fighting systems.
First of at least six prototypes to be built is
scheduled for field trials in December 1983.
Series production not likely before 1990 if India
decides to go ahead with program. Initial proto-
types will be equipped with West German diesel
engines and British 120-mm rifled main guns.
Tooling up for production under license. Initial
tanks probably will be assembled from kits.
Unclear when MK I production will cease.
Designed to provide a lighter 105-mm variant for
use by India's airborne and mountain units. Vir-
tual duplicate of a British gun.
Placement of Soviet gun on light British-designed
tank required lengthening vehicle and adding
another road wheel to handle the weight and
recoil.
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Table 1 (continued)
Equipment
Origin of Date of Initial
Technology Production
End of
Production
Estimated
Number Built
Leander-class
frigate
UK 1974 8
1981
6
Godavari-class
frigate and its
follow-on
India/USSR/ 1983 8
Western Europe
Continuing
1
Submarine
chaser
UK 1977 8
Continuing
8
Atoll air-to-air
USSR 1968
Continuing
10,000
SS-11-B1
antitank
France 1971
Continuing
7,000
Remarks
Constructed with British technical assistance.
Most equipment on last two frigates manufac-
tured in India.
Six guided-missile ships to be built. Three Goda-
varis will be steam powered. Three larger follow-
on ships will have imported gas turbine engines.
Armaments and most electronics for the six com-
batants also will be imported.
Designed after British Ford-class submarine
chaser. Of the eight built so far, six have gone to
the Navy and two to the Coast Guard. Four
additional ships are fitting out, and at least three
more are under construction.
Produced under license.
Production under French license probably will
cease in 1984 when the MILAN missile comes on
line.
Deficiencies in the arms industry have caused short-
falls in output, both quantitatively and qualitatively,
and have also occasionally forced the government to
import components or complete weapon systems to
meet India's goals for modernizing the armed forces.
Examples include the import of 105-mm gun barrels
to equip Indian-made tanks, when the domestic indus-
try failed to meet the production schedule, and the
purchase of T-72 tanks, when it became apparent to
New Delhi that a new main battle tank of its own
design would not become operational before 1990.
India's success in indigenously designing and produc-
ing weapons, in our opinion, has been limited largely
to small arms, field artillery, and small naval craft.
Ministry of Defense publications also indicate that the
Indians have successfully developed electronic and
communications equipment for each of the services.
Indian Government and US defense attache reporting
indicate that items such as high-performance aircraft,
modern armored vehicles, and tactical missiles are
either produced under foreign license or based on
foreign design.
Indian difficulties in producing modern weapons also
result from efforts to meld differing Soviet and West-
ern technologies and from the indecisiveness of the
bureaucracy in selecting weapons for production, in
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our judgment. The Indians, for example, have experi-
enced serious problems and delays in putting a Soviet
130-mm gun on a light British-designed tank chassis
to make an "Indian" self-propelled field gun
In addition,
India has had difficulty in modifying Soviet T-55
tanks with 105-mm guns produced under British
licensing. We believe that indecisiveness by senior
Indian defense officials concerning whether to pro-
ceed with the development of a new Indian-designed
tank or to approve the import and licensed production
of a modern Soviet tank also has contributed to delays
in India's domestic tank program.
Technology Transfer
Despite improvement in its own capabilities, India
remains dependent on foreign military technology to
modernize its armed forces. New Delhi imports this
technology in three ways: direct purchases of foreign
equipment; licensed assembly or production of com-
plete weapon systems; and imports of weapons or
subsystems for installation on equipment of either
Indian or foreign design.
Such imports benefit India in several ways, according
to our analysis. Major weapons imports have allowed
India to stay well ahead of its principal military
adversary, Pakistan. Moreover, licensed production of
weapon systems has provided industrial technologies
beyond domestic capabilities without the effort and
expense of independent development. The technology
found in imported weapon systems and industrial
production methods also can be applied to other
domestic military programs as well as to nondefense
industries. In our view, the greatest gains would be in
such high-technology areas as aeronautics, missile
guidance systems, electronics, and engines. We be-
lieve the new technology, in theory, also would raise
the level of India's own developmental work.
In practice, India has been unable to take full advan-
tage of the advanced technology available through
weapons imports. The arms industry has experienced
problems that reflect major difficulties in absorbing
new technologies and production methods. For exam-
ple, our analysis indicates that more than 15 years
after the first MIG was built in India, components on
the latest model are still imported, engines are re-
turned to the USSR for overhaul, and Soviet on-site
technical assistance is required at India's aircraft
production facility. Largely because the Indians have
been unable to successfully assimilate imported tech-
nology, they have repeatedly sought quick fixes
through direct foreign purchases and licenses in an
attempt to keep up with the development of advanced
weapon systems by the USSR and the West. This
process is clearly illustrated in India's prolonged
efforts to field a new main battle tank.
When it is not technically or economically feasible for
India's arms industry to develop and produce a partic-
ular weapon, we believe New Delhi prefers to acquire
the item by purchasing the license to manufacture it
domestically. Based on past practice, licensing agree-
ments usually call for the supplier initially to provide
a small number of the weapons, plus the necessary
design information and equipment to permit domestic
manufacture. The supplier thereafter provides parts
and components as required while an independent
capability is developed. India's arms industry present-
ly does not produce all components of any weapon it
manufactures under license, according to our re-
search.
Modernizing and maintaining India's 1-million-man
armed forces absorb a large part of the government's
resources. Defense expenditures have doubled since
1975 and account for about 17 percent of total central
government outlays, according to Indian budget docu-
ments (see table 2). The Army receives more than half
of the defense spending, although its share has been
steadily declining over the past eight years as serv-
icewide capital expenditures have increased. The
Army's predominance in the defense budget reflects
its large manpower and resultant high wage bill and
its extensive equipment needs. Air Force expenditures
have been slightly over 20 percent of defense outlays,
while the Navy's share has risen only marginally to
about 7 percent, according to the budget documents.
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Research and Development
India's Defense Research and Development Organiza-
tion (DRDO) employs some 30,000 people, who are
engaged in more than 1,000 projects in areas of
aeronautics, missiles and rockets, electronics, vehi-
cles, armaments, naval oceanography, engineering,
and general military stores and materials, according
to a senior DRDO official and Ministry of Defense
reports. Although research is conducted in all areas
of weaponry, we believe that little new indigenous
technology has been developed, and most projects
undertaken involve the adaptction of foreign designs
to Indian requirements. In 1980 DRDO underwent a
major reorganization designed, according to Indian
press analysis, to correct serious deficiencies in man-
agement and strengthen indigenous development of
forts.
however, we estimate that expenditures have re-
mained at about 2 percent. For 1982 this would
amount to more than $100 million. We do not know
the current distribution of funds by service, but,
based on past spending practices, we believe that
more than 45 percent goes for Air Force projects,
followed by about 40 percent for the Army and less
than 10 percent for the Navy, with the remainder
committed to interservice projects.
One of the highest DRDO priorities,
is the development of
modern missiles under t ie direction of India's prima-
ry missile research center at Hyderabad. Information
from US defense attaches and public statements by
believe is based on the Soviet SA-6 system
the Indian Defense Minister indicate that the Indians 25X1
are working on a new surface-to-air missile, which we
Despite some improvements since the reorganization,
the capabilities of DRDO remain limited, in our
judgment. India's research and development efforts,
we believe, continue to be hampered by a shortage of
trained engineers, scientists, and highly skilled pro-
duction personnel; insufficient funding; and a lack of
long-term defense planning. The willingness of plan-
ners to import a foreign-designed system as an alter-
native to a domestic arms program that has encoun-
tered major technical problems and delays has
resulted in the early abandonment of projects-
particularly in the guided-missile field-before the
technical hurdles can be overcome.-
Expenditures on military research and development
have steadily increased in absolute terms since the
mid-1970s, according to Indian Government docu-
ments. As a percentage of the annual defense budget,
a sur-
face-to-surface missile with about a 150-kilometer
range is under development.
All three types of mis-
siles, in our analysis, are far from ready for deploy-
ment.
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Another high priority, we believe, is the development
of sophisticated electronics and optics. According to 25X1
our research, development of advanced' radars, vari-
ous electronic warfare and night-vision devices, and
secure communications equipment is being empha-
sized. The latter includes the development of a
reliable, high-speed communications system.
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Table 2
India: Defense Expenditures a
1978
1979
1980
1981
1982
1983
Indian
Estimate
Defense spending
(million US $)b
2,857
2,866
3,076
Total central government spending
(million US $)
Defense share of total
(percent)
19.6.
18.5
16.7
Army
61.7
60.9
60.4
58.5
55.6
55.0
54.5
52.8
53.5
Air Force
19.3
19.7
19.4
21.5
25.0
23.8
21.6
22.9
21.7
Navy
5.4
5.8
5.7
5.8
6.0
5.9
6.6
7.0
7.4
Other c
13.6
13.6
14.5
14.2
13.4
15.3
17.3
17.3
17.4
a Fiscal year beginning 1 April of year shown. Data based on Indian
Government budget documents.
b Excludes spending on the nine public-sector defense industries and
paramilitary forces. Includes spending on pensions.
c Includes pensions and capital expenditures, which we are unable
to allocate by service. Capital expenditures include such items as
acquisition of land; construction, expansion, and modernization of
defense-related facilities; and the replacement of machinery and
equipment in the ordnance factories.
Through the import of foreign arms and technology
from the USSR and Western nations, India can
obtain a high-quality military arsenal at the expense
of increased financial costs and operational difficul-
ties. Such imports would permit a more rapid and
comprehensive buildup of modern weapons and tech-
nical know-how for India's three services and large
defense production sector. It also would reduce the
impact on the armed forces' capabilities and readiness
in the event of an arms or technology embargo by a
single supplier.
Having a number of major arms suppliers, however,
compounds existing financial, operational, mainte-
nance, and training deficiencies found in fielding a
large military force such as India's. Lack of equip-
ment compatiblility-coupled with associated logistic
problems-could lower operational readiness rates,
particularly in-times of major hostilities. In addition,
the military's greater familiarity with Soviet weapons,
together with their comparative ease of maintenance
and lower costs, argues against large-scale purchases
of higher priced Western arms and probably will limit
Indian purchases from the West mostly to selected
high-technology systems.
Recent and planned arms acquisitions for India's
three services have virtually locked the nation into
higher defense spending through the remainder of the
1980s, in our view (see table 3). Despite careful
shopping and hard bargaining, we believe Indian hard
currency payments for Western arms deliveries will
double over the next five years if current acquisition
patterns continue. The emphasis in purchases, howev-
er, will remain on Soviet equipment, and downpay-
ments and debt servicing for Soviet military imports
could become especially onerous by the mid-1980s.
India's likely signing of several new arms contracts
with Moscow will make matters worse. Payments to
the Soviet Union appreciably add to India's balance-
of-payments problems even though Moscow does not
demand hard currency and offers generous credit
terms. We believe New Delhi may be forced to reduce
petroleum purchases from the USSR or divert exports
from hard currency markets to meet its growing
obligations to Moscow. In the event that New Delhi is
faced with severe financial shortfalls, Moscow proba-
bly would grant India some relief in the form of debt
extension, as it has to other favored clients.
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Table 3
Estimates of Annual Payments
for Military Imports, by Supplier
1975-79
150 to 225
25 to 100
175-to 325
Current
300 to 400
200
500 to 600
1985-89
500 to 1,000
300 to 500
800 to 1,500
a Accounts with the Soviet Union are maintained in rupees, and
both countries have agreed to balance bilateral payments. India
pays for military and commercial imports from the Soviet Union by
exporting goods, some of which have few alternative markets. In the
future, in order to meet the increasing burden of repayments to the
USSR, India will probably have to offer goods that could have been
sold in hard currency markets. As a result, the benefits from much-
touted "rupee payment" agreements will diminish.
Judging from their modernization plans and pursuit
of new arms, senior military leaders appear confident
of receiving adequate funds to improve the combat
readiness of the armed forces. We believe, however,
that the Indian Government will be hard pressed to
cope with the dual burden of large commercial and
military imports. New Delhi, in our view, has only an
even chance of avoiding a severe shortage of foreign
exchange by the mid-1980s, a view shared publicly by
some of Prime Minister Gandhi's advisers. Such
shortages, when coupled with the rapidly rising mili-
tary costs associated with advanced weapon systems,
larger equipment inventories and maintenance re-
quirements, and expansion of domestic military pro-
duction capabilities, would place major strains on
India's ability to import. Unless New Delhi discovers
new crude oil deposits that permit reduced petroleum
imports or greatly expands military and nonmilitary
exports, it may have to tighten its liberalized import
policy for industrial goods. In our judgment, New
Delhi would be reluctant to reduce or delay military
purchases or production endeavors in order to ease a
general financial crisis, but it would do so if necessary
to sustain adequate imports of essential food items.
spending to develop a stronger defense industry.
Efforts to expand and modernize India's defense
industry will continue throughout the decade with a
goal of achieving self-sufficiency in arms production,
according to public statements by Gandhi and senior
defense officials. We do not expect the outcome of
India's national elections, which are likely to be held
next year, to cause a dramatic change in the govern- 25X1
ment's defense policies or in the planned level of
Because of the government's emphasis on improving
domestic production, we believe the country will
consolidate its position as one of the world's largest
arms producers and provide an increasing portion of
its own military requirements. Progress in enhancing
the defense industries is likely to be steady rather 25X1
than through a dramatic jump in production capabili-
Our analysis indicates, however, that complete inde-
pendence in arms production is beyond India's grasp.
We believe that imports, licensed production, and
technical assistance from other countries will remain
indispensable elements for the manufacture of ad-
vanced arms in India. The Indians' inability to meet
production schedules or to follow through from the
design phase to series production of an advanced
weapon system is likely to continue to plague the
defense industry. In addition, we judge that the
quality of Indian-produced equipment will remain
below what major arms suppliers can provide. More
important, we believe that advances in the highly
industrialized nations are widening the technological
gap despite Indian efforts to narrow it.
In our view, India will rely more heavily on the USSR
than in the past for developing its defense industry
because it can obtain more advantageous financial
and technical concessions from the USSR than from
Western countries. Not only do we expect Soviet
assistance to increase, but we also believe the scope of
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We estimate that India has purchased more than $14
billion in arms from the USSR and Western suppliers
since 1970, nearly $10 billion of which has occurred
since Gandhi's return to power in 1980 (see chart).
The more recent purchases indicate, in our view, a
strong government commitment to building a more
modern and powerful military, concern about defi-
ciencies in Indian defense industries, and a reaction
to US arms sales to Pakistan. Imports have included
aircraft, helicopters, air- and surface-launched mis-
siles, armored fighting. vehicles, artillery, warships,
and sophisticated electronic equipment.
Although New Delhi remains willing to purchase
limited quantities of selected high-technology arms
from the West, our analysis indicates that India
continues to rely on the USSR for the bulk of its
military needs.- Of the nearly $10 billion in purchases
since early 1980, 70 percent were from the Soviet
Union, according to our estimates.
the Indians are negotiating with t :e
Soviets for the procurement of a wide range of
we expect will be bought from the USSR. The Navy
also wants to enhance its air arm with additional
strike aircraft for its carrier, antisubmarine helicop-
Indian military exports are small in absolute terms
and in proportion to total exports. India's Minister of
Defense recently told the press that foreign military
sales in 1982 amounted only to about $28 million,
which is less than 0.33 percent of all exports. Our
research indicates that such sales consist largely of
small arms and ammunition, light artillery, trucks,
and various quartermaster supplies. Major export
markets are the less developed countries in the
Middle East, Africa, and South and Southeast Asia.
Until recently New Delhi had not, in our view,
aggressively sought to sell arms and military equip-
ment abroad because of the high priority of satisfying
large domestic defense needs, the low level of produc-
tion, and the poor quality and reliability of many
additional arms and increased defense cooperation,
which we value at several billion dollars. Because of
increased concerns over Indian purchases of Western
arms, Moscow is offering New Delhi some of its most
advanced military hardware and technology at favor-
able prices and repayment terms,
With competition for funs among In ia's
three services likely to become more intense, we
believe that India probably will accept a number of
the offers.
Each military service has projected its import re-
quirements for weapons through the 1980s to meet
perceived threats.
the Army wants larger numbers of new
tanks, infantry fighting vehicles, self-propelled artil-
lery, mobile missile systems, and attack helicopters.
Most of the equipment, in our view, probably will be
purchased from the SSR or produced in India
under Soviet license. the
Air Force is seeking new fighters, missiles, trans-
ports, aerial refueling tankers, and AWACS surveil-
lance aircraft from Soviet and Western sources The
Navy's planned acquisitions emphasize larger ships
with greater range and more sophisticated weapons
and electronic equipment. According to US defense
attache reporting, these include cruisers, destroyers,
missile combatants, and submarines, most of which
Indian products.
New Delhi decided in late 1981, however, to try to
increase India's military exports in view of its bleak
foreign exchange prospects, according to Indian press
accounts. A high-level committee has been estab-
lished to look into ways to increase production and
boost overseas sales. Potential new buyers are being
sought largely from traditional markets in the Mid-
dle East, Africa, and South and Southeast Asia. As a
result of these efforts, India's Defense Minister said
publicly in August 1983 that he expects military
exports to exceed $40 million this year-still, howev-
er, only a nominal amount.
Potentially more important, New Delhi is seriously
considering proposals by Moscow to develop India's
aircraft industry for export of MIG-21 components
and spare parts to the USSR and its clients,
For the Soviets, this
would ensure an uninterrupted supply of spares to the
numerous countries still operating MIG-21s, while
for the Indians it could provide up to $500 million
annually in added revenues, according to estimates in
the Indian press. Such revenues could be used, in our
view, to help defray a large part of the costs of new
Indo-Soviet arms agreements.
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India: Value of Arms Purchases From the USSR
and Western Suppliers, 1970-838
Air Force/Air Defense equipment Naval equipment
Ground Force equipment
USSR Western suppliers
Total: 2.9 billion US S Total: 1.6 billion US $
52%
25%
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Soviet transfers of production technology abroad will
widen over the next several years as India attempts to
produce more sophisticated arms and Moscow contin-
ues to woo New Delhi away from purchasing Western
weapons. India, however, is likely to continue making
limited purchases of high-technology arms from the
West, particularly for weapon systems unavailable
from the USSR. Such purchases also serve to press
the Soviets to grant India additional concessions.
The Soviets have already agreed to give New Delhi
preferential treatment in the transfer of advanced
Soviet technology abroad,
Such transfers will reinforce
India's unique position as a non-Communist licensed
producer of major Soviet arms. It is the only non-
Communist country to manufacture the MIG-21
fighter, and it will be the first one to produce MIG-
27s, T-72s, and BMPs, which we estimate will begin
series production in the mid-to-late 1980s. We also
expect the Soviets to provide increased assistance in
the design and manufacture of warships in India.F_
The likely conclusion of a deal for India to manufac-
ture and sell MIG-21 spare parts to the USSR would
further deepen the military relationship between the
two countries. To the extent such an arrangement
proves successful, we would expect it to be extended
selectively to other military items produced in India
under Soviet license.
Indian exports of domestically produced arms and
military supplies will continue to be relatively small
for the remainder of this decade, despite pressures
from the government to increase foreign sales. New
Delhi's paramount consideration, in our view, is re-
placing the considerable quantities of old equipment
in the services with more modern arms. We expect
that this will result in the services' continuing to
monopolize the use of major domestically produced
weapons. We also believe that restrictions imposed by
licensing agreements probably will extend into the
1990s and limit the export of the most marketable
military items. Only the selling of MIG-21 parts to
the USSR, in our view, offers the potential for India
to make significant gains in revenues from its military
Implications for the United States
We believe a few new opportunities for closer Indo-
US military cooperation may arise, but technology
transfers and licenses for assembly of advanced weap-
ons to help New Delhi upgrade and expand its defense
production base will come largely from the USSR
and, to a lesser extent, from Western Europe. Barriers
to improving Indo-US relations, in our view, include
India's suspicions of US intentions in the region,
strong opposition to the US military presence on
Diego Garcia and in the Indian Ocean, and unwilling-
ness to accept US military sales and export control
restrictions. According to US diplomatic reporting,
India's Defense Minister is particularly upset over the
US sale of the Harpoon antiship missile to Pakistan
and charges that the Harpoon represents a qualitative
escalation in US offensive weapons introduced into
the region that are useful to Pakistan against only
India.
We believe that increased Soviet cooperation in In-
dia's defense industries would further deepen the
relationship between New Delhi and Moscow and
may lead to closer Indian military relations with
Warsaw Pact countries. At the very least, we would
expect a larger Soviet presence in India and more
training of Indian military personnel in the USSR.
We believe, however, that India would stop short of
granting the USSR special military privileges such as
basing rights, even though India's increasing financial
indebtedness to the USSR for technology transfers
and arms will provide Moscow with new opportunities
to exert pressure on New Delhi for such privileges.
Low-keyed approaches by Moscow in the past for
special access by its warships to Indian port facilities
have been repeatedly rejected.
A deepened relationship, in our judgment, could lead
to greater Indo-Soviet intelligence cooperation. Such
cooperation could include the sharing not only of
information on India's neighbors, but also possibly
exports in the near term.
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necrez
If New Delhi purchases advanced US weaponry and
manufacturing technology, we believe that the sale
might result in a diversion of classified US military
information to the USSR. Our research indicates that
New Delhi's close military ties with Moscow include
the presence in India of several hundred Soviet techni-
cians in Indian defense industries
We believe New Delhi would do its best to block
Soviet efforts to acquire such technology, based on
recent US Embassy reporting of the protective meas-
ures taken within India's defense industry to prevent
illegal acquisition of technology or documentation by
unauthorized foreign and Indian nationals. We be-
lieve India would have difficulty, however, thwarting
a sustained, sophisticated espionage effort.
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Appendix A
Indian Defense Plants and Major Products
Bharat Dynamics, Ltd.
Bharat Earth Movers, Ltd.
Antitank guided missiles
Earth-moving equipment, heavy-duty trailers, railroad
coaches
Radars and electronic, communications, and fire-control
equipment
Hyderabad
Bangalore
Bangalore
Ghaziabad
Pune
Submarine chasers, utility landing craft, ocean survey ves- Calcutta
sels, oceangoing tugs
Coastal patrol boats, utility landing craft, torpedo recovery Marmagao
vessels
Jet fighters, helicopters, trainers, transports, and aircraft
engines, avionics, and accessories
Bangalore
Hyderabad
Lucknow
Kanpur
Koraput
Nasik
Korwa
Mazagon Docks, Ltd.
Frigates, corvettes, patrol boats
Bombay
Mishra Dhatu Nigam, Ltd.
Special metals and alloys for aeronautic and electronic
industries
Hyderabad
Secunderabad
Hyderabad
Avadi Heavy Vehicles Factory
Tanks, armored recovery vehicles, self-propelled artillery
Avadi
Aravankadu Explosives Plant
Propellants
Aravankadu
Bombay Motor Vehicle Assembly Plant
Jeeps, trucks up to 3/4 ton
Bombay
Chanda Ammunition Loading Plant
Ammunition
Chanda
Cossipore Arsenal Gun and Shell Factory
Mortars, ammunition
Cossipore
Dehra Dun Ordnance Factory
Optics, fire-control equipment
Dehra Dun
Ichapure Rifle Factory
Rifles, rocket launchers
Ichapure (Calcutta)
Itarsi Munitions Factory
Ammunition, rockets, missiles
Itarsi
Motors, howitzers, gun carriages, truck chassis up to
5 tons
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Indian Defense Plants and Major Products (continued)
Jamshedpur Motor Vehicle Plant
3.5-ton trucks
Jamshedpur
Kanpur Ordnance Plant
Tank and field guns, howitzers, machineguns
Kanpur
Khamaria Ammunition Plant
Fuses, tank and artillery ammunition
Khamaria
Kirkee Ammunition Plant
Ammunition, mines, grenades, and fuses
Kirkee
Kirkee Explosives Factory
TNT, plastic explosives, initiators, primers
Kirkee
Nagpur Ammunition Components Plant
Mortar shells
Ambajhari
Sriharikota Propellant Plant
Rocket motors
Sriharikota
Tiruchirappalli Small Arms Plant
Rifles, carbines, machineguns
Tiruchirappalli
Varangaon Ammunition Plant
Ammunition
Varangaon
Vikram Sarabhai Space Center
Sounding rockets
Thumba
Eleven unidentified defense-related factories
Bridging equipment, telecommunications cables, clothing,
leather goods, parachutes, rations, other general and non-
lethal stores
Unlocated
Will produce armored vehicles and engines.
Medak
Avadi
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Appendix B
Major Defense Industry Programs
Aircraft
India's aerospace industry is dominated by a single
government-controlled corporation-Hindustan Aero-
nautics Limited (HAL)-the largest firm in the de-
fense sector. Its 11 plants, employing more than
40,000 people, produce high-performance jet fighters,
trainers, helicopters, transports, aircraft engines, and
a variety of avionics equipment and accessories, ac-
cording to Ministry of Defense reports. The US
defense attache reports that a 12th plant at Korwa is
now under construction and will manufacture parts
for the Jaguar and the Mirage 2000, which India is
acquiring.
The largest single production program at HAL is the
manufacture of MIG fighters under license from the
USSR. Several MIG-21 variants have been built since
the 1960s, the latest being the MIG-21bis. Indian
press accounts indicate that HAL also has begun
tooling up for the assembly and eventual indigenous
production of some 200 MIG-27 aircraft, a ground
attack derivative of the MIG-23 aircraft already
operational with the Indian Air Force. The first
Indian-assembled MIG-27 is expected to roll out of
HAL next spring, according to the press.
A recent addition to HAL's product line is the Anglo-
French Jaguar strike aircraft. The Indian press indi-
cates that a total of 76 aircraft are to be assembled
from kits, the first of which was test flown in March
1982. Indian-assembled Jaguars reportedly will differ
from the 40 delivered by the United Kingdom in fly-
away condition by incorporating improved avionics
and progressively more Indian-manufactured compo-
nents, including an Indian-designed IFF (identifica-
tion friend or foe) system.
Until last year, HAL also produced a light combat
day fighter, the Ajeet (Invincible), which is an im-
proved version of the British Gnat that India built
under license until 1974. The company is developing a
combat-capable two-seat Ajeet trainer for the Air
Force and Navy, but press reports of design and
engineering problems, coupled with the crash in De-
cember 1982 of the first prototype built, have serious-
ly set back the program, in our view. Although the
Indian press reported that government plans for the
trainer's production were canceled in May of this
year, recent public statements by the Minister of
Defense indicate that development of the two-seat
aircraft is continuing.
Information from the US defense attache's office and
the Indian press reflect Air Force intentions to replace
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defense and close air support perceived by Indian
military leaders for the late 1980s/early 1990s.
New Delhi hopes to upgrade its helicopter program,
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HAL currently manufactures the Lama (Cheetah)
and Alouette III (Chetak) helicopters under French
license. Press accounts indicate that most components
and parts are made in India, including castings and
forgings, rotor blades, and most of the transmission
system. The company is attempting to develop and
produce its own advanced light helicopter, which
eventually is to replace the two French-designed
aircraft. According to the Indian press, the proposed
twin-engined helicopter will be equipped with anti-
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though officially authorized by the government in
1976, the project is several years behind schedule
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Latest combat aircraft in India's inventory-MIG-23BN, MIG-
21 bis, and Jaguar F__1
because of bureaucratic, design, and technical prob-
lems, according to reliable information from the US
defense attache's office. In our view, the first helicop-
ter is unlikely to roll off the production line before the
late 1980s, even with West European technical assist-
ance that India is currently seeking, because of the
long leadtime required to start up a new line.
Ground Force Equipment
India manufactures most types of ground force equip-
ment. According to our analysis, most major items are
based on foreign design, and a number of systems are
produced under foreign license. Indian Government
documents and press indicate that weapons produc-
tion includes individual and crew-served weapons,
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ranging from rifles, machineguns, mortars, and recoil-
less antitank weapons to air defense and field artil-
lery. Indian press accounts also report that India has
developed an air-portable, towed 105-mm field gun,
which is scheduled to begin full-scale production later
this year. The new gun, designed to replace the older,
heavier 25-pounder, is a virtual duplicate of a British
gun, according to US defense attache reports. Our
research indicates that Indian defense factories also
manufacture grenades, mines, and most ammunition
used by the military from 7.62 mm to 130 mm. India
also builds transport vehicles up to 7.5 tons, according
to an official Indian military publication, but heavier
trucks and special purpose vehicles such as tank
transporters must still be imported.
One of the most important ground force weapons the
Indians build is the Vijayanta tank designed by the
British firm Vickers. We estimate that the Avadi
Heavy Vehicles Factory has produced about 1,600 of
the 37-ton armored vehicles. Although several key
parts are still imported, India's Defense Minister
stated publicly in August that the factory was now
manufacturing about 95 percent of the tank's compo-
nents, including the 105-mm main gun.
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jayantas is to stop in December 1983, although we
believe that Avadi will continue to build chassis for
other armored vehicles and will produce through
retrofitting an upgraded version of the tank.
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The Indians also have been attempting for a number
of years to develop a new indigenous 48-ton main
battle tank, the MBT-80. The first prototype is to be
completed by the end of the year, according to India's
Minister of Defense. Because of serious technological
difficulties encountered in the development of the
tank, however, we believe that it probably could not
enter series production before 1990. We question
whether the MBT-80 as it is now envisioned will ever
become India's main battle tank. In addition to the
likely production of an upgraded Vijayanta, the
Indians are proceeding with plans to manufacture a
version of the Soviet T-72 tank under license at Avadi
beizinning in late 1984 or 1985
has an option with the USSR eventually to acquire a
more advanced follow-on tank to the T-72.
India also is producing other armored vehicles. Two
are based on the Vijayanta chassis-an armored
recovery vehicle and a 130-mm self-propelled gun, the
latter of which we estimate began series production
this year. According to the Indian press, the Indians
are building a new plant at Medak in the state of
Andhra Pradesh for the production of Soviet BMP
infantry fighting vehicles under license.
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Indian-built 130-mm self-pro-
pelled gunF_~
Naval Vessels
Construction of major naval combatants is done at
India's Mazagon Docks Limited of Bombay-the
largest and best equipped shipyard in the country. In
1981 India completed a 15-year program of building
six steam-driven Leander-class frigates of 1950s de-
sign. Although technical assistance in constructing
the ships was provided by the British, open-source
reporting indicates that less help was required by
India in building the last two Leanders. In addition,
most equipment on these two ships-including the
main boilers, turbine generators, radar, and fire-
control equipment-was manufactured in India, F_
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India is now building other naval ships at Mazagon,
including three indigenously designed Godavari-class
guided-missile frigates. According to overhead im-
agery and US defense attache reports, the first steam-
powered Godavari is now undergoing sea trials and is
scheduled to be commissioned by the end of the year,
the second has been launched and is fitting out, and
the third is still under construction.
US defense attache reporting
hat three other ships-a naval
training vessel and two 1,000-ton corvettes-are being
constructed at Mazagon Docks.
Smaller Indian shipyards also build and repair lesser
naval vessels. According the Indian
press, submarine chasers, coastal patrol boats, utility
landing craft, torpedo recovery vessels, and ocean
survey ships have been constructed at the shipyards at
Calcutta and Marmagao. The naval dockyard at
Vishakhapatnam performs repairs on Indian F-class
submarines, but US defense attache reporting indi-
cates that major overhaul work must still be done in
the USSR. The other important Indian shipyard,
Hindustan Shipyard at Vishakhapatnam, builds mer-
chant ships up to 30,000 deadweight tons, according
to international shipbuilding directories.
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Missiles
India manufactures air-to-air and antitank missiles
under Soviet and French license agreements. Indian
Government publications indicate that Hindustan
Aeronautics Limited produces the Soviet AA-2 Atoll
for Indian MIG aircraft, and Bharat Dynamics Lim-
ited builds the French-designed SS-11 antitank mis-
sile for the Indian Army. India is seeking to replace
these old systems with newer generation French mis-
for the production of the wire-guided MILAN anti-
tank missile system was signed by India and the
Franco-German firm Euromissile in 1981, and pro-
duction is scheduled to begin in 1984.
Electronics
India's growing military electronics industry produces
an array of increasingly sophisticated equipment.
According to our research, some of the more techno-
logically advanced items are built under license, while
many locally manufactured electronics remain
dependent on imported components and raw materi-
als. The largest manufacturer of electronic equipment
is Bharat Electronics Limited, whose product line
troposcatter equipment.
the firm also produces nearly all of the communica-
tions equipment used by the military, builds an
indigenously designed IFF system for the Air Force,
and plans to manufacture night-vision devices.
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Appendix C
Shortcomings in India's Defense Industry
Aircraft
India is capable of assembling and producing high-
performance aircraft under foreign license, but we
judge that a number of nontechnical and technical
factors adversely affect the industry's capabilities.
Our research indicates that these include government
indecision on selecting aircraft types for production,
financial constraints, and ambitions that often exceed
the capabilities of both facilities and personnel. We
believe HAL's designing and manufacturing activities
also are handicapped by a shortage of experienced
and competent designers and engineers.
India's ability to produce indigenously a high-
performance fighter of Western quality, in our judg-
ment, also is limited by technical shortcomings in the
fields of metallurgy, aerodynamics, avionics, and en-
gines. Our research indicates that the metal used in
the fabrication of MIG airframes and engines contain
more inclusions and porosity than metals used by
Western manufacturers. In addition, we do not be-
lieve that the Indians are appropriately concerned
about the effects of contact of dissimilar metals. The
resulting poor metallurgical quality decreases the
service life of Indian-built aircraft. Moreover, our
analysis indicates that Indian machining is considera-
bly less sophisticated and precise in cutting and
forming metals than that in the West. We believe that
these factors, coupled with India's lesser emphasis on
clean aerodynamic design, probably result in consid-
erable variations in performance by Western stand-
ards among MIG fighters coming off the production
line. These considerations could prove to be a serious
problem for India in producing Western-designed
fighters but are not so critical, in our view, for the
production of Soviet MIGs, which do not require so
much precision machining.
Armored Vehicles
India manufactures much of its ground force equip-
ment, but it has been unable to put its new MBT-80
tank into production despite more than 10 years of
development work. In our view, the causes stem from
both manufacturing and engineering problems. The
technology for building advanced components and the
ability to integrate these into a modern main battle
tank appear to exceed current Indian capabilities.
Moreover, although US defense attache reporting
indicates that the Indians have developed the required
advanced armor for the tank, our analysis indicates
that the protection afforded by the new armor may
not be as effective as claimed. India also has been
unable to produce an engine powerful enough for the
tank. the original speci-
fications for the MBT-80 called for a 1,500-horsepow-
er engine, but the Indians have been unable to develop
one capable of producing more than about 400 horse-
power. Other problems mentioned in the Indian press
have been with the hydropneumatic suspension system
and with the integrated fire-control system. The latter
requires advanced microelectronics and optics that the
Indians may not be able to produce reliably in
quantity.
In our view, the Indians also have had problems
developing an armored personnel carrier (APC),
which requires a lower level of technology and lesser
manufacturing skills than those for a modern tank.
Efforts during the 1970s to build an APC similar in
appearance to the US M-113 failed because, we
believe, the prototypes produced could not achieve the
performance standards required by the Army. The
APC program was shelved in 1976, and the Indian
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carrier)
ogv to manufacture the Soviet BMP under license,
Warships
Indian naval shipbuilding capabilities also are limited,
in our view, despite a number of successes. Although
the Indians can build the hulls and superstructures of
relatively large surface warships, we believe they are
unable to design and produce indigenously the gas-
turbine propulsion systems, electronics, and missile
systems required to equip modern combatants, as
evidenced by the import of this equipment. For sub-
marines, we judge that the metallurgical and welding
technology and skills necessary to fabricate pressure
hulls, as well as the ability to design and produce the
required hydraulic and pneumatic systems for diving,
exceed India's current technological limits. Even with
the licensed production of Type-209 submarines, we
believe the Indians will continue to have problems in
these areas and will require on-site West German
supervision.
Missiles and Electronics
These are the two weakest areas in India's defense
production, in our opinion. Although India is capable
of producing missiles and electronic systems, they are
largely of foreign design and are mostly older genera-
tion systems. In our view, the development and manu-
facture of advanced missile guidance and control
systems, air intercept radars, electronic warfare de-
vices, and digital/multichannel communications
equipment require more complex electronics, minia-
turization, and performance reliability than Indian
technology currently permits. We believe the high
level of precision machining required for these sys-
tems, coupled with insufficient microelectronic skills,
will continue to inhibit Indian efforts in these fields.
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Indian SLV-3 booster launched
We judge that India lacks the necessary guidance,
reentry vehicle, and liquid-fueled rocket technologies
to develop and manufacture a medium- or long-range
ballistic missile during the 1980s. India's considerable
investment in space technology, however, could lead
to the eventual development of such a missile system,
in our view. In July 1980 India successfully orbited its
first earth satellite with an indigenous multistage
launch vehicle, the SLV-3. The space booster technol-
ogy involved in the lifting of satellites into earth orbit
can be applied to the development of ballistic missiles.
It is unclear however,
whether India has begun development of the neces-
sary guidance and reentry systems, although press
accounts indicate that India has started work on
developing a liquid-fueled rocket.
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Secret
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