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26th December 2024 (13 Topics)

India, Saudi Arabia Cooperation in defence sector

Context

India and Saudi Arabia are strengthening their defense and industrial cooperation, with a focus on technology transfer, joint ventures, and localized production. This aligns with Saudi Arabia's Vision 2030 and India’s Make in India initiative, both of which emphasize reducing dependency on defense imports.

Defence-industrial cooperation between India and Saudi Arabia

  • Mutual Trust in Defense Collaboration: Defense cooperation is built on a foundation of trust and shared goals, underscored by recent statements emphasizing Saudi Arabia as a top ally for India in defense technology sharing. Both nations aim to reduce their reliance on imports by strengthening domestic production capabilities.
  • Investment and Localization: Saudi Arabia’s Vision 2030 aims to localize 50% of its defense spending, complementing India’s push for self-reliance through its Make in India initiative.
    • Indian defense companies have actively sought partnerships in critical sectors like shipbuilding, electronics, AI, and cybersecurity, with Saudi firms showing strong interest.
  • Bilateral Engagements: Recent high-level visits and defense exhibitions have facilitated discussions on joint training exercises, technology exchange, and co-development of military platforms.
    • Military exercises such as ‘Sada Tanseeq’ and ‘Al Mohed Al Hindi’ exemplify the growing operational synergy between the two nations.
  • Trade in Defense Equipment: Saudi Arabia has signed contracts for Indian defense equipment demonstrating the potential for deeper industrial ties.
    • Saudi Arabia is reported to have procured the 155mm Advanced Towed Artillery Gun System (ATAGS) from Bharat Forge.
    • Saudi Arabia has in the past evaluated two types of artillery guns manufactured from Bharat Forge.

Significance of Saudi Arabia for India

  • Strategic Importance: Saudi Arabia is a key partner in West Asia, contributing to regional stability and India’s energy security. This partnership is critical for India’s Look West Policy.
  • Economic Significance: Saudi Arabia is a significant source of investments in India. There is potential for growth in trade and manufacturing collaboration, particularly in high-tech industries.
  • Geopolitical Relevance: Strong relationship strengthens India’s influence in the Gulf region. Furthermore, it promotes strategic autonomy by diversifying defense partnerships.
  • Energy Security: Saudi Arabia is a major supplier of crude oil to India, playing a pivotal role in India’s energy needs.

Fact Box:

India-Saudi Arabia Relations:

  • Economic Ties: India is Saudi Arabia’s second-largest trading partner, while Saudi Arabia is India’s fifth-largest trading partner.
    • Bilateral trade stood at USD 52.8 billion in 2022-23, with significant contributions from crude oil imports and exports of refined petroleum products.
  • Energy Security: Saudi Arabia is India’s second-largest supplier of crude oil and plays a crucial role in India’s energy needs, further cementing its strategic importance.
  • Geopolitical Importance: As a leader in the Gulf region, Saudi Arabia’s partnership enhances India’s influence in West Asia.
    • The relationship aligns with India’s Look West Policy, focusing on stability, security, and economic integration in the region.
  • Cultural and Strategic Ties: The large Indian diaspora in Saudi Arabia, contributing significantly to remittances, adds a people-centric dimension to the relationship.
    • Defense collaboration enhances the strategic depth of the partnership, extending beyond traditional trade and energy linkages.

Current State of India’s Defence Sector

  • India has achieved record growth in defence production, reaching ?1.27 lakh crore in FY 2023-24, a 174% increase since 2014-15.
  • Key Defence Platforms: Notable indigenous systems include:
    • Dhanush Artillery Gun System
    • Advanced Towed Artillery Gun System (ATAGS)
    • LCA Tejas, MBT Arjun, submarines, and INS Vikrant.
    • Production targets are set to ?1.75 lakh crore by 2024-25 and ?3 lakh crore by 2029.
  • Defence Exports Growth: Defence exports reached ?21,083 crore in FY 2023-24, a 30-fold increase from Rs 686 crore in FY 2013-14.
  • Key Policy Reforms
    • Liberalized FDI: Up to 74% (Automatic Route) and 100% (Government Route) allowed.
    • Positive Indigenization Lists: Embargo on imports for 5,521 items, boosting domestic manufacturing.
    • Defence Corridors: Established in Uttar Pradesh and Tamil Nadu to promote industrial growth.
  • Major Initiatives
    • SRIJAN Portal promotes MSME participation in indigenization.
    • iDEX Scheme encourages innovation through startups and MSMEs.
    • Budget Focus: 75% of modernization funds allocated for domestic procurement in FY 2024-25

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