India-EU Defence Pact: A New Era of Collaboration
The recently signed defence pact between India and the European Union (EU) marks a significant shift in India's role from merely a buyer or low-end supplier to a more integrated industrial partner within European defence supply chains. This transition relies on India’s swift entry into key agreements that support EU’s security cooperation and capability development.
India-EU Security and Defence Partnership (SDP)
- The SDP is described as "first-of-its-kind" and "overarching," aiming to create new opportunities for Indian firms in co-development and co-production within European defence programs.
- The agreement is expected to go beyond transactional contracts, promoting sustained participation in European projects.
India-EU Free Trade Agreement (FTA)
The SDP signing coincided with the successful conclusion of negotiations on the India-EU FTA. While investment scales remain unspecified, the EU’s "ReArm Europe Plan/Readiness 2030" aims to leverage over 800 billion euros in defence spending by 2030.
Current Collaborations and Industry Impact
- European defence firms already have manufacturing bases in India, with expanded partnerships for product localisation.
- Tata Advanced Systems established a private-sector military aircraft manufacturing facility for the Airbus C295 in 2024 and is setting up a facility for Rafale fuselage production in Hyderabad.
- Mazagon Dock Shipbuilders will construct six advanced submarines with ThyssenKrupp Marine Systems.
Potential for Two-way Integration
- The SDP could lead to deeper integration, enhancing the "Make in India, For the World" initiative.
- It covers capacity building, thereby boosting joint ventures, co-development, and co-production by leveraging EU technology and Indian ecosystems.
Security Agreements and PESCO
Negotiations are ongoing for a "Security of Information Agreement" which is crucial for classified data exchange. Discussions are also underway for India's participation in the EU's Permanent Structured Cooperation (PESCO), which facilitates collaborative capability development.
Future Directions and Challenges
- A new industry-led forum is proposed to enable collaborations between Indian and European sectors, with an immediate focus on small, executable outcomes.
- Key objectives include standardizing engagement expectations and ensuring visibility into European defence programs for Indian manufacturers.
Co-production vs. Localisation
True co-production involves treating Indian companies as stakeholders with shared design responsibility and intellectual property development, distinguishing it from mere localisation.
Conclusion
The India-EU defence collaboration is poised to generate long-term value, with early pilot programs and trust-building setting the stage for deeper cooperation. Key to success will be the joint design and development of advanced defence applications and ensuring that Indian firms are treated as equal partners in these initiatives.
