Military Establishment in India

What perhaps most distinguishes the military establishment in India from that in other Third World countries is the scope and development of military production within the country itself. This phenomenon argues for the economic importance or rationale of military expenditures for Indian capital:

The far-reaching and broad scoped production program of the Indian ordnance factories and armaments enterprises includes not only small arms, munitions and uniforms, but also complex weapons systems like supersonic fighters, jet trainers, fighter bombers, helicopters, medium and light tanks, antitank and ground-to-air missiles, destroyers and patrol boats. Additionally, electronic equipment and precision machine tools are produced. The newest production line of state armaments enterprise is the fabrication of special metals and high quality materials for the construction of airplanes, missiles and electronic equipment and instruments.

Most famous, perhaps, is the Indian production of Soviet-designed Mig-21 fighters, the spare parts for which India sought to sell to Egypt after its break with the Soviet Union. When the Soviets refused to allow India to proceed with this sale, the Chinese offered to replace the parts for free! India has been more successful in the export of other heavy weaponry to other Middie Eastern countries.

Lock and Wulf distinguish two development models of arms production. One attempts, but largely fails, to achieve self-sufficiency in a vertically integrated arms industry. With the much more common model -- which is part of the general "industrialization" model -- arms are manufactured through licensing and/or subcontracting by Western and Eastern producers. This results in a high dependence on imported components, the costs of which absorb all the potential foreign exchange savings of local production, and also in direct and indirect production costs that make domestic production even more expensive for the national economy than importing the same equipment outright. The second model of arms production -- which, like other industrial production, results in a great dependency on imports -satisfies the desire of metropolitan manufacturers to transfer part of their productive operations to cheap-labor economies that do not impose political restrictions and may even offer political advantages for export to Third World countries. An example is West German arms manufacture in Thailand, through which the German firm circumvents West Germany's legal restrictions of arms exports to countries with certain political tensions. This model, of course, generates incentives in the Third World countries to emulate the metropolitan countries in reducing unit production costs by producing more than local demand can absorb and then exporting the excess.