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Intrigue

India's expanding navy

By John Fowler, Jeremy Dicker and Helen Zhang

India is set to add a third aircraft carrier worth $5B to its fleet, with its Defense Acquisition Council likely to clear the deal on Friday, according to Bloomberg.

With a refurbed Russian carrier already in service, this rumoured addition would be India’s second made-in-India carrier. It’s all part of India’s aim of getting a 175-ship force (up from ~130 ships now) in the water by 2035.

There’s a mix of internal and external factors at play here:

Some of Prime Minister Modi’s key domestic drivers include a push to: 

  • Turn India into a global defence industry hub

  • Generate related jobs, tech, and investment, and

  • Tap the country’s nationalist sentiment (Modi rocked a G-suit for a ride in one of India’s homemade fighter jets this past weekend).

Some of Modi’s key external drivers include a push to:

  • Play catch-up with China, which has the world’s largest navy

  • Reduce his reliance on others (like Russia) for military kit, and

  • Thereby expand his room to manoeuvre as a global player.

But why aircraft carriers specifically? 

Due to new tech like anti-ship ballistic missiles, there’s been debate on whether carriers are now just high-cost sitting ducks. But while vulnerabilities will shape how carriers are used, they’re still key: they enable countries to join (or threaten to join) a fight almost anywhere, not just within refuelling distance from home.

This kind of imposing presence is what the boffins call ‘power projection’. And it’s why India, the US, China, Russia, France, and others are still building carriers.

INTRIGUE’S TAKE

Let’s run some quick numbers here.

India is now one of only ~seven countries that can build a carrier. And it’s now got the same number of carriers as China. Sounds good, right?

  • But China’s third carrier is already in testing, while India’s won’t be ready until the 2030s (by which point its oldest will likely be retired)

  • China already has the world’s largest navy (370 ships and subs, ~90 more than the US), and

  • China’s navy is growing more quickly on the back of a production capacity that’s reportedly now 200 times that of the US.

So this proposed new aircraft carrier is a big deal for India. But on balance, naval momentum in the region still looks to be heading the other way.

Also worth noting:

  • Based on tonnage, the US Navy (with 11 carriers) is still double the size of China’s. The US continues to retain certain tech edges also.

  • But one historical study suggests the number (not quality) of vessels is the most important factor in determining a naval victory.

  • India says up to 70 different navies sail in the Indian Ocean. It wants three carriers to ensure it has at least one off each of its two main coasts maintaining a continuous presence in the Indian Ocean.

FINANCIAL TIPS FROM FINANCE BUZZ