India to challenge China’s foray in South America; To explore defence export opportunities

The region has been plagued by narco-terrorism.

In a challenge to China’s forays in South America, India is exploring the sale of various military platforms to the region. Venezuela is by far is the largest buyer of Chinese defence hardware others being Ecuador and Bolivia. China’s political, economic, commercial relations with Latin America have grown exponentially in the first two decades of the present century. And, “Coupled with this another development which has been less noticed outside the continent is the defence tie China has built up by offering crude oil and mineral linked soft credits including to purchase its defence equipment and platforms,” says a former Indian envoy to the region. Diplomatic sources in the Indian missions in the region have confirmed to the Financial Express Online “Post COVID-19, there are opportunities to export defence equipment in the South American Region. Several private players and DPSUs are showing interest in the region. ”

The region has been plagued by narco-terrorism. The drug cartels have been very active in the region right from Mexico down to Peru. And this fight against transnational organized crime and drug trafficking has increased the region’s requirement for modern protection equipment for their security forces. “This makes it a potential market for military stores. Many of the countries and the police/ military forces of the region are engaged in the modernization of its forces which will give Indian companies the opportunity to exploit that market” explained a top diplomat.

On the list of systems that are likely to be exported include artillery systems, protected vehicles, electronic warfare, naval combat management system, military communications C4I solutions, small arms, night vision devices, and other related military equipment.

In a major policy shift, the government in its first term had notified a new strategy for export of defence products that not only encourages the sale of military equipment to foreign nations.

India-Chile Defence Cooperation

“Later this year an Indian Naval Delegation is expected to travel to Chile to attend the EXPONAVAL 2020from December 1-4 at a naval base in that country. An invitation has been extended by the Commander of the Chilean Navy to Indian Navy Chief Admiral Karambir Singh and also for one of the Indian warships to attend an event at Valpariaso during their expo,” sources have confirmed to Financial Express Online. Also, an invitation has been extended to M/s BrahMos to participate in the event.

As per the laws for supply any industrial or defence equipment in Chile, companies all over the world are required to register themselves with the Chilean Armed Forces and the Joint Staff.

So far several Indian Companies with the help of the Indian Mission in Santiago have registered themselves with Chilean Armed Forces. Some Indian companies including M/s Brahmos; M/s Azista Industries;M/s Reliance Naval Engineering; M/s Goa Shipyard Ltd., are now registered. And registration of some companies including — New Space India Limited; Neo Power; Hindustan Aeronautics Limited; Ordnance Factory Board; and BEML is under process.

In March this year, the Chilean Navy has acquired an Anchor Handling Towing Supply and Standby Vessel (AHTSSV) ocean support vessel from Indian shipyard Larsen & Toubro Shipbuilding for a value of $ 11.5 million. This unit was part of an order for four supply vessels (PSVs) and two vessels specializing in towing and handling and anchoring of offshore platforms (AHTSSV) made in 2013 by Halul Offshore Services Co. WLL (HOSC) from Qatar to L&T Shipbuilding. “The delivery of the AHTSSV, with around $ 20 million each, was cancelled by HOSC in 2016 due to the fall in demand for services from the oil industry. The acquisition of the ship, which has been carried out through the Foreign Military Sales (FMS) modality of the United States Department of Defense, will be managed by the Naval Sea Systems Command (Navsea) and the pre-delivery work is scheduled to be completed in Chennai, soon,” an informed source told Financial Express Online.

The Chilean Navy is undergoing modernisation. And India could offer Indian shipyards and industry for major ‘Make in India’ initiatives. Also, there could be a possibility of co-operation in the field of `Scorpene’ Submarines. “The Chilean Navy has been operating this class of Submarine since 2005 and has developed considerable operational and maintenance expertise. And from India’s point of view, there could be cooperation in training, procedures, documentation, syllabi, maintenance and repair aspects including inventory management without the influence of the OEM,” explained a source.

What can India do in the region?

Delegations from the armed forces can visit these countries. And the Indian government can offer specialized training for officers in Basic and Advanced Mountain Warfare Courses. There could be cross deputation of instructors at respective training establishments. Cross deputation of instructors at respective training establishments; Cross deputation of observers during multinational exercises.

The focus markets will be Brazil, Argentina, Chile, Ecuador, Colombia, Bolivia, Mexico, El Salvador, Guatemala, Peru, Honduras and other countries in the region which are looking for body armour, plates, aircraft protection, naval protection, for homeland security—bulletproof jackets, helmets, night vision devices, general munitions etc.

MSME MKU Company based in the UP Defence Industrial Corridor has been perhaps the only one from India working in the region for a number of years now. And have been regularly supplying body armour for security forces of several of the Latin American countries.

Shipbuilding prospects with the South American Shipyards

Three nations in the region have three best shipyards that currently exist in the South American region: COTECMAR-Colombia; SIMA-Perú; and ASMAR-Chile. Though they already have full order books, Indian companies could look at joint ventures in shipbuilding.

The attraction for BrahMos Missiles

Besides Chile, countries like Brazil too had discussions with the BrahMos officials about the possibility of buying the missiles from India.

Views of a former envoy to the region

Ravi Bangar, Former Ambassador of India to Colombia & Ecuador, tells Financial Express Online, “Venezuela once a strong US ally in Latin America has faced sanctions since the times of Chavez. These have been further tightened during the Trump regime seeking nothing short of a regime change in this oil-rich nation. The sanctions regime has also prohibited the commercial sale and resupplies of arms to Venezuela since 2006. This degraded the Venezuelan forces’ preparedness to defend against possible US attacks, maintain law and order and combat organised crime. It alarmed and prompted Venezuela to look elsewhere for its defence requirements. The gap was promptly bridged by Russia and China.”

The recent tensions in the US-China relations underscored by trade wars, developments in the South China Sea, China’s aggressive posture in the Indo-Pacific and other issues provide an opportunity for emerging countries like India to deepen and expand ties with Latin America including in the defence field.

According to Mr Bangar, “India should be in the pole position as it has hardware and experience of working in tough conditions with equipment and platforms of its own and diverse origin-Russian, US, French, UK etc. Further, Make in India drive in this sector while fulfilling domestic needs will also create surpluses for export. While India did supply some stores to a few Latin American countries, a lot more can be done. All this will require political support, a clear and credible policy, administrative innovation and determination, soft power leverage, right sales pitch, strong after-sales and handholding in case of any turbulence.”

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