CNBC’s Inside India Newsletter: How India’s Emerging as a Formidable Player in Defense

This report is from this week’s cnbc’s “inside India” newsletter which brings you timely, Insightful news and market commentary on the emerging powerhouse and the big businesses bends Like what you see? You can subscribeHere.

India is already the world’s top weapons important but that’s not stopping the country from strengthening its defense capability. New Delhi Plans to Spend About $ 200 Billion Over the Next 10 years On transforming and modernizing its Military.

This Raises an important question: why is India in a hurry to double down on weaponry and fighter jets? You would think it’s Pakistan, The Country’s Neighbor and Longtime Rival. However, Foreign policy analysts say the trigger is to the East of India – Specifically, China.

Heightened geopolitical tensions, skirmishes at the India-china border and beijing’s elevated presence in the Indian Ocean Have Contributed to India’s’s Quest to Beef Up UP Its Defense. India and China are also locked in a technology rival that experts say have contributed to growing tensions between the two rising asian nations.

“China’s Expanystist Policies and Military Buildup Along The Border Remain a Serious Challenge,” Pravin Krishna, Professor of International Economics at Johns Hospitals, TOLD CNBCC.

Beijing’s Elevated Presence Around the subcontinent’s watters is the most pressing concern.

“China has made the point that the Indian Ocean is not India’s Ocean,” Pramit Pal Chaudhuri, Eurasia Group’s South Asia Practice Head, Told CNBC on the phone.

Chaudhari Added that according to Indian Navy Intelligence, China is Building Aircraft Carries, two of which will be deployed in the Indian Ocean. Beijing also

Renewed US-India Relations

Against this Backdrop, India Prime Minister Narendra Modi Met Us President Donald Trump at the White House two weeks ago Where the two leaders confirmed efforts to strengthen us-India defense ties.

Modi also signed india up to Buy More Us Defense EquipmentIncluding additional heavy armored vehicles, drones and fighter jets.

“It is extraordinary that, less than one month into the new Trump Administration, The United States and India Could Announs Such a Broad Set of Actions in the Defense Sector,” Former Us Ambassador to India Keennethe Juster Told CNBC in an email.

Procuring Us Defense Equipment is also one way new Delhi can lower the growing us-India trade deficit, seen as key to maintaining good relations with trump.

Boeing Has Captured The Larget Port of Us Foreign Military Sense to India Since 2017, According to Estimates by Cowen Washington Research Group, ARM ARM AT The Investment Bank TD Cowen. Trump also offred India Access to Lockheed Martin’s State-of-the-Shart Supersonic Lockheed Martin F-35 Fighter Jets.

India is not technically eligible for the f-35s giving that count is not a formal military all of the us and is currently a buyer of russian equipment.

If Trump does make an exception, analysts say that would be a big win for India, thought others are hard-spent to see this Haappen. According to Reuters, India’s Foreign Secretary Vikram Misri Told Reporters Earlier This Month That us offer to sell f-35s was at a “proposal stage”, adding that the acquisition process has not started.

“We believe there will be some challenges completeing the sala Given India’s use of Russian Military Systems,” Roman Schweizer, Aerospace and Defense Policy Analy Analy AT COWEN WASHINGTON Research Group, Told CNBC over email.

Playing Catch-up with China

Irrespective of the outcome of the f-35 deal, India’s defense spending is expected to remain robust. Overall, Jpmorgan Estimates India’s Capital Expenditures on Defense will grow by 8 percent every year from 2024 to 2026.

“Growth in India’s Defense Capex is Driven by Its Own Geopolitical and Security Considerations,” Atul Tiwari, Infrastructure, Industrials and Utilities Analyst at JPMORGAN, Wrotte to Clients in a Note on Monday.

However, Experts Argue That India Still has a long way to go in playing catch-up with its main rival, China. By official numbers, China’s Military and Defense Budget is currently three times the size of India’s and growing at a fast rate, according to Eurasia.

Capacity Limitations in the US Cold also complicate India’s plan to double down on us defense equipment.

“Limited Investment in Manufacturing… means the us defense Industrial Base Faces Capacity Constrants and Extended Delivery Timelines. Weaponry, as well as america’s own needs to counter China, “Tara Hariharan, Head of Macro Research at Nwi Management, A New York-Based Emerging Markets-Focused Hedge Fund, Told CNBC.

Drive Toward Self-Suplicity

Hariharan added that over time, pressure will grow on India to become more self-sufficient because it’s alredy facing internal tensions between a desire to buy us arms and the government ‘make india ” Policies that prioritize domestic production. Hindustan AeronauticsBharat Electronics and Zen Technologies have emerged as three of the biggest players in India’s Growing Defense Sector, According to A JPMORGAN Note.

India has become Increasingly Aware of What’s Best to Buy from Foreign Nations, and which equipment should be manufactured at home.

In 2023, General Electric Signed a partnership to co-manufacture Jet Engines with India’s Hindustan Aeronautics. The deal, which received received users’ approval, involved the transfer of technology to India.

Sources close to the Indian government shared that Technology Transfer was a Topic Discussed Between Modi and Trump During the Indian Leader’s Recent Trip.

“If India can find other ways to obtain technology transfer and co-quality equipment inside the country… Delivery Times will be accelerated,” called who aSKED The SouRCE ASKED ASEKED THE OCED NOT to Be Weren’st authorized to spendak on the matter.

Krishna at Johns Hopkins University Added that over time, India’s desire is to move away from its dependence on Foreign Arms and Invest Heavily in India.

India’s Ambition to expand its defense capability and protect its populous nation from new threts could make it a more attractive partner forAmerican and Russian Companies – a dance between competing world power that India will have to balance elegant.

The European Union Wants India to Lower its tariffs.As part of discusations on the India-eu free trade agreement, The bloc wants delhi to reduce its “very high tarifs” On Goods Such as Wines, Spirits and Cars, A Senior Eu Official Said. However, the eu has notbly said that tariffs need not be “one for one for” as different countries experience gulfs in their developmental levels, and face unique challenges in their evils. Ursula von der Leyen, President of the Eu, will be in India on Feb. 27 to 28 and Meet the Country’s Prime Minister Narendra Modi.

Negotiations on the India-Uk Free Trade Agreement Are Progressing Well.There are only a Few outstanding issues remaining before the fta out be finalizedUK Business and Trade Secretary Jonathan Reynolds Told CNBC-TV18 exclusively. However, Reynolds Stopped Short of offering a concrete timeline for the deal, which he said would be a comprehensive agrement covening not just just good and services, but also lower ja Operate in bot counts.

India’s courting of Tesla may not be smooth-sailing.Tesla has reportedly been scouting showroom locations in India to start seling vehicles in the country, following a meeting a meeting between India prime minster Narendra Modi and Tesla Ceo Elon Musk Earliry in FEBRURIRIRI. However, The Ev Company has Yet to Announce Any Plans to Establish Factories in India Despite Modi’s push, such as his introduction of a new Ev tariff policy.

Deepseek is causing an outflow from Indian equities.The Chinese Artificial Intelligence Company’s Cost-Efficient Model has Lifted Sentiment in the Chinese Market, with a Gauge of the Country’s ONSHORE AS ONSHORE as Well as Over Shares SOARIS SOARS SOARIS SORIS SORS Its January low. The money has to come from somewhere – most of the time, it’s Diverted from its emerging markets competitor IndiaThe subcontinent’s slowing economy is also contributing to the sharp correction of its stock market in recent months.

Indian stocks continued to be in negative territory this week. As of 12:30 PM Local Time on Feb. 27, The Benchmark Nifty 50 Index Edged Down 0.09,% While The Broader Sensex Index was flat.

The Benchmark 10-Year Indian Government Bond Yield Ticked Up Slightly to 6.701%.

On cnbc tv this week, aditya suresh, head of India equity research at macquaarie capital, said that India-dedicated funds are trading more defensivelyFocusing on the information technology sector, and select pharmaceutical companies and financials, which have “Valuation Support.” On the other hand, there are risks in the consumer discretionary space and the Industrial Segment BeCause of Elevated Earnings Expectations.

Meanwhile, after the release of deepsek, the focus in the artificial intelligence space has shifted to software offersAccording to Kunal Vora, BNP Paribas’ Director and Head of India Equity Research. “Indian Companies can play a very important role there,” Vora said, particularly because the Indian rupee is depreciating, which would make make it service