Page 52 - Diplomatists Nov

INDIA AND THE W ORLD

THE PRIV A TIZA TION OF
THE PRIVATIZATION OF

T
’S DEFENSE SEC
O
INDIA
INDIA’S DEFENSE SECTORR
LIMITATIONS AND PROSPECTS

BY ADAM A. AZIM*

rivatization within the Indian defense sector with Pakistan. Because of the Cold War context,
largely began with the onset of the 21st the United States in 1965 imposed an embargo
Pcentury, when India ushered in liberalization on weapons sales to India as a concession to its
and economic reforms throughout the Indian Pakistani ally, and as a result, India turned to the
economy as a whole. These efforts aimed at former Soviet Union and thus Russia for defense
liberalization and reforms were intended to prompt support.
a shift away from a state-led command economy However, in the 21st century and despite foreign
that had been instituted during the Cold War. Also, support, the Indian government remains the most
this shift away from a command economy would important patron of Indian defense by providing
entail handing over the reins of a number of state- for approximately 80 percent of development
owned enterprises to the private sector in order to costs. Nevertheless, there has been an increase
boost effi ciency and quality. of approximately 26 percent in ‘Foreign Direct
But for the most part, India’s defense sector Investment’ (FDI) in India’s defense sector. Tata
still remains heavily reliant on support from both and Airbus are believed to be the two private
the Indian government as well as technologically companies who have procured the weightiest
advanced nations such as Russia and more recently contracts for private defense development in India.
the United States. India’s reliance on Russia for But with the demise of the Cold War context
defense capabilities began in 1965 after India’s war and with India’s rapid economic growth in the 21st

52 • Extraordinary and Plenipotentiary Diplomatist • Vol 8 • Issue 9 • November 2020, Noida