NEW AVENUES IN EXPORT MARKET

MANUFACTURING OF ARMS AND AMMUNITION

AROOJ ASGHAR
May 11 - 17, 2009

There were sixteen ordnance factories in British India, either it was planned or just coincidence that none of them was in East of United India, which later became Pakistan. Resultantly there was no ammunition manufacturing facility in Pakistan and consequently it had to rely on imported arms and ammunition a great deal. There is no doubt that newly created Pakistan emerged with a fragile state apparatus and Armed Forces were headed by three British Chiefs.

Pakistan got only 6,000 tons of munitions out of 1700,000 tons in its possession, which was significantly less than its share. The subsequent adventure by India in Kashmir pushed Pakistan's army into a state of actual imbalance. On the economic front, situation was not different; Pakistan received only 147 million pounds, which was only 17% of total balance. Because of India's treat, Pakistan had to spend 70% of that amount for the procurement of arms.

Pakistan started working on establishing its first ordnance factory to manufacture rifles and ammunition in 1951. In addition, in the same year, Pakistan laid the foundation of four factories with the cooperation of British Royal Ordnance, at Wah near Rawalpindi. This was the first step towards the establishment of defense industry in Pakistan. Lack of resources pushed Pakistan to look for some outside help. It was a time of Cold War where there were two super powers, the US and the Soviet Union. Pakistan preferred to enter in US block to meet the challenges of security, territorial integrity and to achieve a reasonable military equilibrium with India.

Pakistan signed a Mutual Defense Assistance Agreement with the US in 1950 and 1954. Later Pakistan joined SEATO and CENTO in 1955, which provided US security guarantee to Pakistan. In 1959, Pakistan signed a bilateral Agreement of Cooperation with the US and became an 'America's most allied ally in Asia. Because of these agreements, Pakistan received significant military aid and training throughout 1950s and the early 1960s.

Little attention was given to domestic production during the period of reliance on US supply. However, after the 1965 Indo-Pak War, US imposed various restrictions on Pakistan and drastic reduction in economic and military assistance forced the country to start thinking on self-reliance on defense products. US not only imposed restrictions on Pakistan but also on India, but unlike Pakistan, India was also in USSR camp, which kept supplying it, equipments. This dual camp benefited India in many ways whereas Pakistan was badly suffered

The increasing pressure of Indian military build-up, forced Pakistan to turn towards China, North Korea, Germany, Italy and France for its defense procurement programs. China, being a neighbor proved a good friend and helped Pakistan by providing equipments for its infantry divisions, military vehicles, tanks, and aircraft. France supplied Mirage aircraft and submarines. Soviet Union also offered aid to Pakistan but abruptly stopped under Indian pressure in 1969. With this imbalance of power in the region and internal disturbance provided India an opportunity to attack on East Pakistan in 1971. Internal politics and lack of governance encouraged anti-Pakistan forces to break Pakistan. After War, Pakistan spent huge resources on defense imports besides rebuilding its defense system.

From following we can imagine the need of self reliance in the maintenance of modern aircraft and weapon systems; 1971: Heavy Industries at Taxila was established 1972: F-6 overhaul and Rebuild Factory was established at Kamra 1973: Pakistan Aeronautical Complex at Kamra came into being 1976: Pakistan established Dr. A. Q. Khan Research Laboratories (KRL)

As US did in past, US again imposed sanctions on Pakistan when it learned that Pakistan had secretly begun construction of a uranium enrichment facility in 1979. This restriction lasted short because of USSR envision in Afghanistan.

For the first time in Pakistan's history, government established separate ministry for defense production in 1991. Scope of work of the Ministry was to promote defense production facilities including Pakistan Ordnance Factory (POF), the Heavy Industries at Taxila (HIT), and Pakistan Aeronautical Complex (PAC). In 1996, the US allowed nearly $370 million of previously embargoed arms and spare parts to Pakistan But after the May 1998 nuclear tests, the US re-imposed sanctions under Glenn Amendment, which almost banned all sorts of economic, financial, and military assistance to Pakistan. However, these sanctions were also short lived and Pakistan became US favorite country after the 9/11 events and all those sanctions which were imposed on Pakistan after nuclear test were lifted.

If we look back at the history, major chunk of country's defense needs were fulfilled from imports. However, with all those restrictions, Pakistan kept on working to develop some key areas to become self-sufficient in defense. There are over 20 major public sector units and over a 100 private sector firms engaged in the manufacture of defense-related products. With the passage of time and dedication, Pakistan's defense industry has grown into well-established units, and has developed the potential to export defense equipment to friendly states and international markets. This export potential in defense industry is not only the key to the country's survival, but it would also bring in the much-needed foreign exchange.

Since 2000, Pakistan is holding annual exhibitions under the auspices of the International Defense Exhibition and Seminar. Pakistan's defense exports have grown tremendously. Pakistan has already found markets in a number of Asian, African, and Middle Eastern countries. Pakistan's export target has increased from US$147 million to US$500 million in last five years.

In the area of defense Production, our country has again made a fair progress. Pakistan Ordnance Factories are totally providing nearly all types of ammunitions required by our defense Services and Pakistan Aeronautical Complex and Heavy Industries Taxila are rebuilding all types of aircrafts and Armored Vehicles on our inventory. It is because of these facilities that we have been able to keep our defense forces in high state of readiness over the past many years. Additionally, PAC is Producing Mushshak training aircraft under license and JF-17 Fighter aircraft in Pakistan. HIT has the honor to field indigenously produced tank 'Al-Khalid". In the area of Navy, we have again co-produced Mines Counter Measures Vessels and Agosta sub-Marine with the help of France.

Being a new entrant in the market, with a 95% share of public sector, Pakistan is currently sustaining $500 million worth of defense exports. The defense exports can increase dramatically by exporting Al-Khalid, along with JF-17 fighter, developed with China. By selling these big items, Pakistan can earn as much as US$1 billion target in next few years. Although it would be just a small portion of international arms market, but Pakistan could achieve parity with its imports expenditures.

Most of the equipments developed by Pakistan are through reverse engineering. Pakistan has one of the best brains of the world and our engineers are developing one of the most cost-effective and affordable weapons of the world. Experts from different countries have also showed interest in POF and HIT equipment, especially the Al-Khalid tank. Experts said that Al-Khalid includes qualities of some of the best tanks in the world, like targeting the enemy at night and auto-tracking of enemy tanks.

In Pakistan's case, the sale would be government-to-government, which will take more time in terms of evaluating and finalizing the deal. Marketing and sale of defense products is a time-consuming job. Therefore, timely exchange of information to the target countries is vital to boost defense exports. However, to capture a big market there is a need for opening for the foreign investment, joint ventures with friendly states and encouraging Pakistan's private sector to involve in defense manufacturing and export.