The European Union has proposed a European Defence Industrial Strategy [EDIS] indicating that war on the Continent is likely to be a long-term phenomenon and the peace dividend that was enjoyed post the Second World War is over.
The EU is thus planning to consolidate considerable defence industrial resources of member states for creating a common pool to better serve the interests of the group at large.
The aim of the EDIS is essentially “to have the defence systems and equipment ready when they are needed and in the quantities that are needed”.
To achieve the same EU countries are encouraged to invest more and together in Europe with new programmes at the European level.
European Defence Industry Programme will receive funding worth €1.5 billion. The funds will also support research and boost investment while working on a supply chain resilience. Symbolically “an Office for Defence Innovation will open in Kyiv”.
The Strategy also sets out a few targets. By 2030, EU countries should:
Buy at least 40% of the defence equipment by working together
Spend at least 50 % defence procurement budget on products made in Europe
Trade at least 35% of defence goods between EU countries instead of with other countries
The Commission has proposed a pilot of the European version of the U.S. Foreign Military Sales scheme, under which the United States carries out government to government sales as per Reuters.
"We don't have a Pentagon anywhere. We don't have an institution that has a strong buying capacity, driving the market and driving industry," said EU foreign policy chief Josep Borrell. "But we have to cooperate and coordinate."
The proposals will need to be approved by EU member states who are unlikely to cede their sovereign rights over defence and security policies.
While in general NATO – the transatlantic alliance which apart from several EU states also include the United States, Canada and the UK has welcomed the proposal it has also warned of possible duplication.
Review
As Europe enjoyed the post Second World War dividend defence spending had come down considerably. A jolt was given by former US President Donald Trump who asked EU to increase defence spending as had been agreed upon at least by NATO member states.
With the possibility of Mr Trump returning to power in the US in the November elections and sustained conflict anticipated with Russia, a common industrial strategy has received priority.
However, while defence industry associations of the EU have appreciated promulgation, how far this will receive the approval of the member states remains to be seen?
Importantly successful implementation of the strategy is likely to be a long term rather than a short-term process which can meet the immediate needs of containing Russian expansion in Ukraine and beyond. Moreover, funding challenges are likely to continue given member states prioritizing their own defence budgets.
Almost on the same day that the EU announced the EDIS, Russian Defence Minister Sergei Shoigu indicated that Russia has strengthened military forces to counter NATO build up.
Russian President Vladimir Putin a few days earlier went a step further warning the West of provoking a nuclear war if troops are sent to fight in Ukraine.
What should India Do Now?
For countries as India the possibility of cutback in defence exports by the EU with trading at least 35 % goods within the grouping may lead to some concerns with several major buys from the Continent from Submarines, fighters for aircraft carriers and transport aircraft amongst others.
The Indian government has a programme of Make in India or Atma Nirbhar Bharat in place but is dependent on technology sharing and industrial production facilitation by global partners.
With focus of the EU on production for meeting the defence requirements within India may tilt towards the United States for defence industrial collaboration and procurements.
There is also scope for collaboration with the EU in defence production for Europe particularly in the field of ammunition which needs to be exploited.
It is thus not surprising that Adani Defence and Aerospace has just launched a new munitions factory in Uttar Pradesh in February 2024.
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