Global Arms Industry: 3 Indian Companies in Top 100 Arms Manufacturers

Given the cross-border nature of its trade, collaboration, and operations, the global arms industry is often described as one of the most internationalized sectors. However, its global reach is nuanced, influenced by geopolitics, national security concerns, technological constraints, and regulatory frameworks. Read here to learn more.

The Stockholm International Peace Research Institute (SIPRI) released its annual report on the world’s 100 largest arms producers, highlighting significant global arms production and defence spending trends.

Notably, three Indian firms featured among the top arms manufacturers globally, emphasizing India’s growing stature in defence production.

SIPRI Report: India’s Presence Among Top Global Arms Producers

• India’s Representation:
  • Three Indian firms ranked among the top 100 largest arms producers in the world.
  • This highlights India’s increasing focus on Indigenous defence production, aligned with the Atmanirbhar Bharat (Self-Reliant India)
• Global Trends:
  • Total arms sales by the top 100 companies reached $592 billion in the last year.
  • The USA, China, and Europe dominated the global arms market, accounting for the largest share of total arms sales.
• Performance of Indian Firms:
  • The inclusion of Indian firms reflects the success of government initiatives such as the Defence Production Policy, which aims to make India a major defence manufacturing hub.

Indian Firms in the SIPRI Report

The combined arms revenues of the three Indian companies in the Top 100 increased to $6.7 billion (+5.8 per cent).

1. Hindustan Aeronautics Limited (HAL):
   • Specializes in aircraft and helicopter manufacturing.
   • Major contributions include fighter jets like the LCA Tejas and transport helicopters.
2. Bharat Electronics Limited (BEL):
   • Focused on electronics and radar systems for defence applications.
   • Supplies advanced systems for the Indian Army, Navy, and Air Force.
3. Mazagon Dock Shipbuilders Ltd
   • Known for a wide range of products for both domestic and overseas clients.
   • Since 1960, MDL has built a total of 802 vessels including 28 warships, from advanced destroyers to missile boats and 7 submarines.

Factors Driving India’s Growth in Defence Production

• Government Policies:
  • Make in India and Defence Procurement Procedure (DPP) to encourage domestic manufacturing.
  • Increased focus on private sector participation and public-private partnerships.
• Indigenous Projects:
  • Development of homegrown defence platforms such as the Arjun Main Battle Tank, INS Vikrant, and BrahMos missile
• Rising Defense Budget:
  • India is one of the largest spenders on defence globally, providing a robust market for domestic arms manufacturers.
• Exports:
  • Indian firms are increasingly focusing on defence exports, with deals for BrahMos missiles and other systems to countries like the Philippines and Vietnam.

Challenges and Way Forward

• Challenges:
  • Dependency on imports for critical technologies.
  • Need for better R&D infrastructure.
  • Competition from established global arms producers.
• Way Forward:
  • Strengthen domestic R&D capabilities in critical technologies.
  • Expand collaboration with international firms through joint ventures and technology transfer.
  • Enhance focus on export promotion to tap into global defence markets.

Global Arms Industry

Geopolitical Dynamics

• Major Players: The industry is dominated by a few countries, notably the United States, Russia, China, France, and the United Kingdom. These nations are the primary exporters, accounting for a significant share of global arms sales.
• Regional Clusters: While the top producers dominate, emerging players like Turkey, South Korea, and India are increasingly entering the global market with indigenous designs and collaborations.

International Trade

• Arms trade occurs globally, but the market is highly polarized:
  • Exporters: A handful of countries dominate exports.
  • Importers: Countries in conflict zones or regions with high defence spending, such as the Middle East and Southeast Asia, are major buyers.
• Restrictions: Many nations impose strict export controls to prevent weapons from reaching adversaries or being used in human rights violations.

Collaboration and Alliances

• Multinational Partnerships: Joint ventures between companies (e.g., Airbus, Eurofighter) and government-backed alliances (e.g., NATO) showcase a globalized approach to research, development, and production.
• Technology Sharing: Advanced weapons systems often require international collaboration, such as the F-35 fighter jet program involving multiple countries.

Domestic vs. International Markets

• Despite global trade, many countries prioritize domestic production for strategic and economic reasons:
  • Self-Reliance: Countries like India are pursuing Indigenous defence programs under initiatives like “Make in India.”
  • Offsets: Importing countries often demand technology transfer or local production as part of purchase agreements, limiting globalization.

Regulatory and Legal Frameworks

• International Treaties: Agreements like the Arms Trade Treaty (ATT) aim to regulate the global arms market, but enforcement remains uneven.
• Sanctions and Restrictions: Geopolitical tensions, such as those involving Russia and Western countries, influence arms trade and collaboration.

Globalization in the Arms Industry

Supply Chains: The complexity of modern weapons requires inputs from multiple countries. For example:

• Components for a single fighter jet might involve suppliers from the U.S., Japan, Germany, and the UK.
• Emerging technologies like AI, cyber defence, and drones further expand the supply chain globally.

Technology and Innovation: 

• Dual-Use Technologies: Innovations in civilian sectors (e.g., AI, aerospace) often spill over into defence, fostering a global exchange of knowledge.
• R&D Collaboration: Cross-border research projects, such as those in the EU’s European Defence Fund, are a hallmark of globalization.

Global Markets: Arms exports are among the most scrutinized global markets. Countries like Saudi Arabia, India, and Egypt depend heavily on imported weapons, demonstrating the interconnected nature of supply and demand.

Challenges to Full Globalization

• National Security Concerns: Countries hesitate to rely on foreign suppliers for critical defence needs due to potential vulnerabilities.
• Export Controls: Strict export regulations and political considerations often limit the free flow of arms.
• Economic and Industrial Policy: Governments protect their domestic defence industries through subsidies, tariffs, and preferential procurement policies.
• Ethical and Legal Issues: The proliferation of arms in conflict zones raises concerns about human rights and the destabilization of regions.

Conclusion

India’s inclusion in the SIPRI top 100 list underscores its potential to become a global defence manufacturing hub. Continued policy support, innovation, and international collaboration will be pivotal in sustaining this growth trajectory.

The global arms industry is a hybrid of globalization and localization. While trade, collaboration, and supply chains span borders, the sector remains heavily influenced by national interests, security concerns, and geopolitical rivalries. Its “global” nature is therefore not uniform but contingent on the strategic imperatives of states and corporations.

Frequently Asked Questions (FAQs)

Q. What is the SIPRI Arms Industry Database?

Ans: The SIPRI Arms Industry Database contains information on arms-producing and military services companies (‘arms companies’). It includes public and private companies but excludes manufacturing or maintenance units of the armed services.

Q. When was the SIPRI Arms database created?

Ans: The SIPRI Arms Industry Database was created in 1989. At that time, it excluded data from companies in China, the Soviet Union and countries in Eastern Europe. The data set has been updated over the years. The current version includes data for Russian companies from 2002 onwards and for some Chinese companies from 2015 onwards.

Q. Which are the largest arms producers?

Ans: The US companies, Lockheed Martin and RTX are the world’s two largest arms producers.

-Article by Swathi Satish