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India Defence and Security Report Q1 2008

Published by: Business Monitor International

Published: Dec. 11, 2007 - 60 Pages


Table of Contents


Executive Summary
SWOT Analysis
India Political SWOT
India Security SWOT
India Defence Industry SWOT
India Economic SWOT
India Business Environment SWOT
Political Overview
Domestic Politics
Failing Nuke Deal To Give Way To Populist Spending
Foreign Policy
India Solves Russian Defence Debt Wrangle
Security Risk Analysis
BMI’s Security Ratings
Table: Regional Security Ratings
Table: State Terrorism Vulnerability Index
Regional Security: North and South-West Asia
General Overview
Inter-State Conflicts - Q407
Internal Conflicts - Q407
India Conflict Risk
India Terrorism Risk
India Physical Safety Risk
Security Overview
Internal Security Situation
Islamist Militancy
Religion
Insurgency
Assam
Nagaland
Maoists
Refugees
External Security Situation
International Terrorism
Border Disputes
Military Structure & Defence Industry
Armed Forces
Table: Regional Armed Forces (including conscripted) 2007
International Deployments
Table: India Deployments
Joint Exercises
Weapons of Mass Destruction
Table: Indian Nuclear-Capable Delivery Vehicles
Market Overview
Arms Trade Overview
Imports
Exports
Industry Trends & Developments
Procurement Trends & Developments
Industry Forecast Scenario
Table: Defence Historical Data and Forecasts
Key Risks to BMI's Forecast Scenario
Macroeconomic Forecast Scenario
Table: India - Economic Activity
Competitive Landscape
Company Profiles
Hindustan Aeronautics Limited (HAL)
Ordnance Factories (OF)
Bharat Electronics Ltd (BEL)
Bharat Dynamics Ltd (BDL)
BAE-HAL Software Ltd
Rolls-Royce International
Honeywell International
BMI Forecast Modelling
How We Generate Our Industry Forecasts
Defence Industry
Sources


Abstract

In Q407, as in Q307, most security issues in India were overshadowed by the deterioration of the political
and internal security situation in Pakistan. Most coverage of the increasing unrest in that country has
focused on the legitimacy - or lack of it - of the rule of General Pervez Musharraf. More importantly,
from the point of view of both India and Pakistan, the latter’s army is in conflict with domestic militants
on three fronts. Pakistan’s army faces an insurrection in Balochistan. The fragile truce with various armed
groups in North and South Waziristan has broken down. Finally, the army faces hostility from Islamic
radicals who have been alienated by the army’s attack on the Lal Masjid (Red Mosque).
As if this were not enough, there is no sign of any improvement in the security situation in Afghanistan,
where India has committed significant numbers of people and money. Indeed, the latest reports suggest
that the Taliban guerrillas and their supporters have consolidated their control on Afghanistan. Opium
production has risen from virtually zero in 2001-02, when US forces first intervened in the country, to
record levels.


The main implication of the latest conflict is that the risk has increased of a total collapse of law and order
in Pakistan, with the result that hundreds of thousands of refugees seek to escape to safety in India.
Further, there is also the possibility that parties associated with the various militant groups in Pakistan
seek to undertake terrorist attacks against targets in India.


Ironically, the level of tension in Kashmir, where the armed forces of India and Pakistan confront each
other (and where the latter often have tactical parity with the Indian Army notwithstanding that Pakistan’s
overall capacity to wage war is much less than India’s) has diminished. It was only in August 2007 that
the mujahideen in Kashmir (i.e. the armed groups supporting Pakistan) claimed the first murder of a
prominent local Indian security official. Commercial trucks crossed the India-Pakistan border in Punjab
for the first time since Partition in 1947.


Meanwhile, there was little respite in the various other conflicts involving non-state armed groups in
India. In one incident, for instance, 17 people were killed when the Naxalites attacked a cultural festival
in Jharkand. Sikh militants (apparently) undertook attacks against Muslims in Punjab and Rajasthan. Six
people died in separatist-related violence in Northern Assam. There was fighting between the Kuki
Liberation Army and Nagaland separatists in Manipur. Against this, the Indian Army and the Assam
Police announced that well over 100 fighters of the United Liberation Front of Asom (ULFA) had
surrendered to the authorities in two weeks in October-November 2007.


The Malabar 2007 naval exercise in the Bay of Bengal was the largest exercise undertaken in Q407.
Involving the navies of Australia, Japan, the US and Singapore, it served to highlight India’s interests in
maintaining control over the major sea lanes to the east and south-east. In October, the governments of
India and Singapore signed an agreement on the conduct of joint training and exercises. In other
developments, India sent Air Force peacekeepers to the MONUC mission in the Democratic Republic of
the Congo, and agreed to provide technical assistance to the armed forces of Gabon.


Other recent developments highlighted both the strengths and weaknesses of India’s (state owned)
defence industries. The strengths include the ability to procure significant amounts (in practice about
75%) of materiel from indigenous suppliers. Operating under licence from British Aerospace, for
instance, Hindustan Aeronautics will supply the majority of 66 Hawk advanced jet trainers, the first of
which were delivered to the Indian Air Force in early October 2007. Against this, the Defence Public
Sector Undertakings (DPSUs) are often inefficient and bureaucratic.


Unfortunately, some of India’s foreign arms suppliers also under-deliver in terms of timeliness or quality.
Mid-October 2007 saw the seventh annual India-Russia Inter Governmental Commission on Military
Technical Co-operation. As we discuss in this report, a recent development has been India’s agreement to
write off Soviet-era debt owed to it in return for participation in joint development of a new military
transport plane. The two countries have also signed an Inter-Governmental Agreement for the Joint
Development and Production of the Fifth Generation Fighter Aircraft. However, the delay in the refitting
and delivery to India of the aircraft carrier Admiral Gorshkov remains an irritant in what is generally a
good relationship.


India maintains this relationship at the same time as it collaborates with the US. As noted in early
November 2007 by Defence Minister AK Antony, ‘India now sources its equipment and platforms from
many countries including Russia, UK, France, Germany, Israel and of late, the United States. However
India’s relationship with Russia is a time-tested one and will continue.’ Ironically, it is opposition from
the communist members of the coalition government that is led by the Indian National Congress which
appears to be the most important impediment to collaboration between India and the US on nuclear
technology. Quite separately, November 2007 saw the 10th meeting of the India-France High Committee
on Defence Co-operation.




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