Russia’s invasion of Ukraine has created a crisis for the country’s already weakened defense manufacturing sector, which will now struggle to export equipment in the near future. This will present India, the largest importer of Russian weapons, with a strategic dilemma. New Delhi will have to choose whether to continue importing arms from Russia in the long run and, based on that decision, what the best substitutes are in the meantime.
Russia’s defense industry had already begun to decline in the post-Cold War era, a trend that was exacerbated by the first Russo-Ukrainian War in 2014. Sanctions, combined with lost equipment at the front, have now made these problems sufficiently acute that Russia cannot honor its existing export commitments. For India, this could create particularly critical problems given China’s increasing involvement in the Russian defense industry.
In response to these challenges, we expect India to begin diversifying its weapons purchases, specifically seeking out countries that manufacture spares and upgrades for Russian-origin weapons. India will also begin increasing its domestic production of such parts, and in the long run will move ahead with its stated intention of developing a stronger indigenous defense industry.
New and Old Customers After 1991
After the collapse of the Soviet Union in 1991, Russia had trouble fulfilling export orders for defense equipment. Russia’s incapacity and shifting geopolitical realities soon led India to begin diversifying its imports and focusing on indigenous weapons development. When Warsaw Pact countries applied to and then joined NATO, this led to another major loss in Russia’s customer base. At the same time, defense privatization and consolidation were already limiting innovation and decreasing productivity.
However, economic recovery starting in the early 2000s also led to the rejuvenation of weapons manufacturing due to domestic and export market demand. While India’s drive to acquire American, French, and Israeli defense systems increased throughout this period, it also continued to acquire major Russian systems like the Su-30MKI fighter jet and even an aircraft carrier. It also leased an Akula-class nuclear submarine from Russia and allegedly acquired the technology and expertise to indigenously manufacture its own nuclear submarine, the Arihant.
Through the 1990s to the 2010s, Russia also expanded sales to new customers like Venezuela, Pakistan, Turkey, the United Arab Emirates, and, more recently, Myanmar. Most importantly, Russia managed to become China’s biggest foreign supplier of weapons during this period. While India remains Russia’s top customer for defense exports, Russia has also become China’s biggest source for defense imports.
Consequences of Crimea
Russia’s state-owned defense manufacturing firms were financially weak even before the current Russo-Ukrainian War. By 2019, their bad debt had reached $10 billion. The total debt of Russia’s military-industrial complex in 2019 amounted to $31 billion, with one major company, Rostec, seeking $4.6 billion to support its subsidiary United Aircraft Corporation. In 2016 and 2017, the Russian government provided bailouts collectively estimated at $11 billion and consolidated all banking services for defense manufacturers under the state-owned Promsvyazbank. An official announcement in 2020 showed total debt at $39.5 billion in relation to estimated total defense spending of nearly $44 billion.
The indebtedness of the large defense manufacturers has in turn affected their research and development capabilities and product demonstration processes. India withdrew from the joint Su-57 fifth-generation fighter aircraft project in 2018 because it was “too expensive, poorly engineered and powered by old and unreliable engines.” Its sunk cost of $295 million indicated both India’s strong historic commitment to the project and its even stronger desire to divest. Around the same time, India chose to buy fourth-generation French-made Rafale fighter jets. Algeria’s reported contract to acquire Su-57s in 2025 may also fall through because Russian firms will not pay to have them flight-tested in Algeria.
Following Russia’s 2014 invasion of Ukraine, it lost access to foreign components supplied by E.U. countries and Ukraine itself. Russia subsequently launched an import substitution drive to return to completely indigenously made systems, but as of 2020 even Russian Security Council Secretary Nikolai Patrushev admitted it had not succeeded. The other problem has been Russia’s reliance on imported machine tools to manufacture defense equipment. Since the dissolution of the Soviet Union, Russia’s machine tools industry has been incapable of supplying domestic markets, leading Russia to import most of its machine tools from E.U. countries and Japan. Before this year’s invasion, Russia was also critically reliant on Taiwanese imports for semiconductor chips, a key component for precision-guided munitions.
From 2014 onwards, countries importing Russian equipment have also faced difficulties in making payments due to existing and threatened sanctions. Russia had made arrangements with India that included reviving the rupee-ruble arrangement, which will now help it to bypass SWIFT restrictions. Similar provisions also exist with China, including 2014 currency-swap arrangements that were renewed in 2017, as well as a 2019 agreement to replace the dollar with the ruble and yuan in bilateral trade. However, the current move away from hard currencies like the dollar and euro will dissuade new clients who face a complex payment process and possible retaliation by other countries, including their other weapons suppliers.
Finally, prior to Russia’s invasion of Ukraine in 2014, the Ukrainian defense industry provided materiel such as helicopter engines, transport aircraft, rockets, missiles, gas turbine engines, and naval power components. The inability to acquire Ukrainian engines hobbled Russia’s shipbuilding, leading to the cancellation of ships under construction and creating production delays, specifically for the Project 22350 Gorshkov-class frigates. Russia was forced to sell incomplete Project 11356 frigates to India, which then reached a separate agreement with Ukraine’s Zorya-Mashproekt for M7H2 gas turbines.
New Wars, New Problems
Russian equipment losses also raise questions about the quality of Russian military equipment. While there is no shortage of potential explanations for Russian military failures in the Ukraine — stiff Ukrainian resistance, limited Russian command and control, Russian logistics failure, etc. — the overestimation of Russian military capability may deepen existing concerns for weapons-importing states. Prior to the war, the consensus was that the newest Russian systems were capable and affordable alternative to Western arms. But this consensus might become another casualty of the war.
India’s Strategic Dilemma
India is at a strategic crossroads: It can remain dependent on Russian arms, seek alternative suppliers, or develop indigenous production. Regardless of India’s long-term policy, it also faces an immediate problem in acquiring weapons, spares, and upgrades. India can neither rely on Russia in the short term nor manufacture substitutes for Russian equipment indigenously within the next five years. Even a firm decision to switch external suppliers — as Israel switched from France to the United States after the Six Day War and Egypt switched from the Soviet Union to the United States in the 1970s — will take time.
Thus, in the short term, India may pursue a combination of policies to replace low-end equipment suppliers and seek new suppliers for spare parts to reduce its immediate dependency on Russia. India can manufacture Russian spares and introduce indigenous upgrades. It already manufactures many Russian weapons and platforms under license, is interested in upping domestic defense manufacturing, and can export what it makes to other Russian clients who are facing similar shortages. India can also get vendors who have experience working with Soviet and Russian systems. One option would be Israel, which has upgraded avionics for its Soviet-era planes and older French Mirage-2000s. India has become Israel’s top external customer for weapons and defense-related technology, expanding its list of Israeli products to unmanned aerial vehicles, airborne warning and control systems, and even anti-tank guided missiles, air-to-air missiles, and surface-to-air missiles. India is also evaluating Bulgaria, Poland, Georgia, Kazakhstan, and Ukraine as potential suppliers of spare parts for India’s Su-30MKI and MiG-29 fighter jets.
In the long term, however, the stakes of India’s strategic choices remain high. In the worst-case scenario, increased uncertainty about the reliability of Russian weapons may even embolden the enemies of countries that rely on them. At the same time, India faces an additional threat because of Russia’s relationship with China. If Russia becomes more dependent on China due to the war’s debilitating effects, China would then be incentivized to import more Russian weapons or acquire stakes in Russian defense manufacturing firms. The risk for New Delhi is that China could use this leverage to limit Russia’s ability to export to India. Defense manufacturing collaboration between Russia and China is already increasing Russian dependence on China for critical parts and technology. If Russia pivots toward China in the wake of the current war it could leave India dangerously adrift.
However, breaking India’s dependence on Russia also creates significant operational threats if it cannot maintain its current equipment. According to a recent report, India’s air force and army would face particularly acute challenges. 20 of 34 fighter squadrons, 65 of 67 tank regiments, 28 of 55 aid defense regiments, and all 30 mechanized infantry regiments rely to a significant extent on Russian platforms or those with Russian parts. Indian defense analyst Rohit Vats also noted in conversation with the authors that Russia further provides “rapid replenishment of spares and complete weapon systems from Russian stocks.” This means that India might also lose access to Russia’s parallel production lines, which would be crucial for manufacturing surges in the case of an actual conflict.
If India selects alternative suppliers, it would mean deepening ties with the United States and the Quadrilateral Security Dialogue, which India currently considers a partnership. The United States designated India as a “Major Defense Partner” in 2016, which permits India to “receive license-free access to a wide range of military and dual-use technologies.” But this does not necessarily translate into military sales. Washington may hail India as a democratic bulwark in Southeast Asia, but defense procurement cooperation must overcome other strategic concerns. These include Washington prioritizing sales to other NATO members, the desire to avoid antagonizing allies who also hope to sell weapons to India, and broader concerns about the health of the U.S. industrial base.
As a result, turning towards Western suppliers, particularly the United States, will require compromises. India may have to loosen requirements that exporters contribute to its domestic industry, facilitate research and development, or provide other assistance. The United States may have to expand the capabilities and technology that it is willing to export while simultaneously streamlining the foreign military sales approval process. On April 11, a 2+2 dialogue brought together the U.S. Secretaries of State and Defense with their Indian counterparts. This may provide an opportunity to overcome some of these challenges.
Finally, developing indigenous production will be time-consuming and there is no guarantee of the results. Since 2020, India has renewed efforts toward indigenously developing and manufacturing defense equipment, but these have been hampered by low investment in research and development. India’s struggle to procure fighter aircraft over the last decade demonstrates this challenge. India cancelled an effort to build 126 fighter aircraft in 2015 and instead purchased 36 Dassault Rafale fighters. Notably, the Rafale deal is now mired in corruption allegations. Indigenization is not a cure for corruption, though India is making strides to improve its defense contracting processes.
Whether India chooses to pursue indigenous production, continue with Russian imports, or seek alternative external suppliers will reflect the broader course of its foreign policy. Given that India has long sought strategic autonomy and flexibility, it will likely prefer hedging and self-sufficiency rather than moving from dependence on one external supplier to dependence on another. Therefore, we expect India to pursue a mixed strategy in the short run: relying on Russia for critical systems where necessary while also working to diversify and find alternative suppliers. In the long run, however, India will focus on indigenously manufacturing weapons. This may not be the first choice for potential Western suppliers, but they should recognize that it is vastly preferable to continued reliance on Russia.
Vasabjit Banerjee is an associate professor of political science at Mississippi State University. Benjamin Tkach is an assistant professor of political science at Mississippi State University.