While a military conflict is detrimental to the growth of any economy, a sense of growing hostilities may in fact be beneficial for the economies of the countries involved. And when the arms supplier is a third country, it too can join the party and benefit economically.

Pakistan has always kept India’s borders hot. This along with incidences of extreme notoriety as in major terrorist attacks fuel a sense of lack of security in India. India in response tries to beef up its security apparatus. With a dearth of sophisticated defence technologies and almost nil defence industry, India goes about shopping around the world for its defence needs. The US in the last two decades has cozied up to India and developed a strategic defence partnership. It used to be Pakistan’s biggest defence trading partner but now with changed Geo-Political scenarios, India has forged deep defence procurement ties with the US.

US is the biggest arms seller in the world, while India is the largest arms importer in the world and is now US’s biggest customer with theManohar potential to grow even bigger. So much so that a “Defence Technology and Trade Initiative (DTII) framework would be created under the US-India Defence Technology and Partnership Act introduced in the US Congress a few days back. An India specific cell would also be created within the Pentagon.

All this begs a question, what’s in it for India and Pakistan. For Pakistan, boiling tensions with India keeps the Military happy and its pockets full. For India, the benefits were not much until it launched a “Make in India” initiative. India plans to modernise its defence forces by 2027 and at an expenditure of about $150 billion. With “Make in India”, India wants arms suppliers to establish assembly, production and R&D facilities within India which indirectly supports job creation, technological development and boosts economy while reducing the overall spend on off the shelf defence procurement. A number of arms supplying India friendly nations are lining up for “Make In India” defence production and sales contracts.

While keeping the tensions simmering is a win-win for both the US and the India, it is important that Pakistan’s economy is kept afloat through Chinese and IMF money, that it stops support for terrorist networks and that the Pakistani Nukes are under control and kept safe by it’s military.

Let me know what do you think. Please feel free to share your thoughts on this.

Aditya Dutta
http://www.linkedin.com/in/adityadutta
Twitter: @aditya_datta

 

 

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