India-EU Defence partnership at new highs: From strategic co-operation to new opportunities, what we know so far

The Indian defence companies are in focus on Tuesday as India and the European Union sign a defence partnership agreement for fostering increased defence collaboration between the two countries. As the world moves towards isolationist policies due to tariffs sanctioned by the United States, the diversification across the defence arena comes at a crucial time. It also provides the EU an opportunity to project power globally without dependence on the United States.

The defence partnership also allows domestic companies to create collaboration with the EU counterparts and deepen the cooperation and knowledge between the two regions. The Defence Partnership Agreement signed today is based on two important pillars, which include maritime security and industrial cooperation. The maritime security cooperation includes joint patrols by India and the EU Naval Forces in the Red Sea and the Gulf of Guinea. The maritime cooperation will secure trade routes between the two regions, protecting against piracy and volatile risks.

The industrial cooperation pillar remains a crucial part of the agreement, which enables India to also become an ‘exporter’ of key defence components, supply chain integration and IPs. The second pillar becomes more important for domestic key defence companies who are likely to benefit from the new partnership agreement with EU. Additionally, the deal will allow Indian manufacturers to level up the quality of components to NATO/US standards.

The most important part of the agreement is India’s inclusion in the list of countries in the PESCO (Permanent Structured Cooperation) projects. The cooperation will allow Indian and EU companies to collaborate in developing defence capabilities.

Solar Industries: The company is a key player in explosives and ammunition manufacturing. After supplying weapons to Ukraine, the EU’s ammunition inventory is expected to be replenished on a immidiete basis. Europe needs high-explosive artillery shells, and the company holds the opportunity to scale the supply as per requirements.

Drone stocks: Companies like Zen Technologies and Ideaforge Technologies are expected to benefit from partnerships for the Red Sea security and counter piracy measures. The partnership mentions counter-UAS (unmanned aerial systems) co-operation, for which these Indian companies could prove to be a cheaper alternative to the US and Israeli companies.

L&T, Shipbuilding companies: Larsen & Toubro, Shipbuilding companies hold the capacity, IPs to build submarines, ships and could benefit from inclusion in PESCO projects.