From almost zero exports of military equipment in 2014 to signing defence deals valued at over $2.5 billion during the last financial year, India's journey as an arms exporter has come a long way and still has a long way to go. However, even a novice would understand that the Narendra Modi government is serious about making the South Asian country one of the top exporters of defence items on the planet.
This week, the chief of premier Defence Research and Development Organisation (DRDO), Dr Samir V Kamat, confirmed that many countries were interested in acquiring the widely acclaimed BrahMos missile from India, with talks with both Vietnam and Indonesia in advanced stages.
To make the deal sweeter for the two Southeast Asian nations, India has also offered them a Credit Line, allowing to procure the BrahMos missile via a soft loan.
Notably, India has been offering such deals to other prospective buyers of its military equipment, possibly luring nations that don't have large coffers to ink contracts.
Soft loans have been a key component of a country's foreign policy, particularly in boosting defence exports and strengthening military ties with friendly nations, Rahul Yelwe, Senior Research Fellow, Centre for Security Studies, School of National Security Studies, Central University of Gujarat, told Sputnik India.
He referenced how, during the Cold War, the Soviet Union provided India with favorable loans to support the purchase of its military equipment. This approach allowed the Soviet Union to gain access to India's substantial defence market and establish multi-sectoral relations with a large country in the long term, the analyst highlighted.
"In the context of India's defence exports, soft loans could significantly enhance its exports, especially in low-income regions such as Southeast Asia, South Asia, and Africa which are often referred to as the potential market for Indian defence products," Yelwe stressed.
Due to limited economic resources, these countries often struggle to afford expensive military hardware, he said. Additionally, the nature of the defence export market has become more competitive with emerging players like South Korea, China, and Turkiye becoming major players in the defence export market, Yelwe underlined.
In this competitive landscape, soft loans may provide a notable advantage for Indian defence products to compete against established and newly emerging stakeholders, he added.
From the perspective of the buyer country, cost is not the only consideration when it comes to defence imports.
Factors such as the reliability of the equipment, the seller's after-sale service record, domestic industrial strength, geopolitical standing, and, most importantly, the technology offered, all play a crucial role in the purchase of defence hardware, the pundit stressed.
For low-income countries, cost remains a primary concern due to their limited economic capacity, which restricts their ability to make expensive defence purchases in hard currency. As a result, these countries either seek semi-standard less capable defence products or opt for alternative sources that can meet their defence needs with more flexible payment options, Yelwe suggested.
While BrahMos is often touted as the flagship product of the Indian defence sector, it is not entirely indigenous, with Russia holding around a 49.5% stake in the project, and the missile is based on the P-800 Oniks design.
"To transform the dynamics of the international defence export market, the Indian defence industry must prioritise domestic research and development, focusing on the design, development, and production of indigenous defence items. Additionally, the country needs to actively promote ATAGs, the MBT Arjun, ALH Dhruv, surface naval ships, missile systems, and various radars and sensors," he underscored.
India's Credit Line to Indonesia for procuring the BrahMos will make it easier to pursue the deal, because India doesn't strain the country's finances, Anak Agung Banyu Perwita, a professor of international relations at the Republic of Indonesia Defence University in Jakarta, told Sputnik India.
He suggested that it is a win-win situation both countries, as it enables India to export high-quality products to a nation with significant potential in the defence export market.
"There's no denying the fact that soft loans make such contracts much more lucrative for developing states like Indonesia and Vietnam. If marketed well, Credit Lines could establish India as a major defence player in the Global South, particularly in the nations of Southeast Asia, and Africa," Perwita noted.
Often not having enough capital to purchase expensive military items, especially from the West, is cited as the main reason behind these countries' move to shift focus towards India for defence products, he sugegsted. In addition to that, soft loans from India could prove to be a game-changer in this direction as they will absorb the financial burden of the respective buyers of the country's military equipment, the expert remarked.
The instances of Credit Lines working perfectly well for the Indian companies that were involved in developing the railway network in many African countries in the past, Dr Debashis Chakraborty, a professor of economics at Indian Institute of Foreign Trade (IIFT), told Sputnik India.
He cited railway projects, led by the state-run Railway Construction (IRCON) International in Nigeria, Algeria, Tanzania, Zambia and Mozambique, with funding from the Indian government through Credit Lines.
"Therefore, if there are takers of Indian Credit Lines or soft loans for development projects, why would these nations decline similar offers to fulfill their security needs," Chakraborty wondered.