India-Russia defence firm eyes $200 mln missile deal with Indonesia

BrahMos, a joint venture between India and Russia, clinched its first foreign deal last year.

NEW DELHI (Reuters) – India-based defence company BrahMos Aerospace expects to close a deal this year to sell Indonesia supersonic cruise missiles worth at least $200 million, as it looks to expand its presence in Southeast Asia, its chief executive said on Wednesday.

BrahMos, a joint venture between India and Russia, clinched its first foreign deal last year with a $375 million sale of shore-based anti-ship missiles to the Philippines - part of Indian Prime Minister Narendra Modi's ambitious push to triple defence exports.

The company has been in protracted negotiations with Indonesia and details about the size and timeline of a potential deal have not been previously reported.

BrahMos Aerospace CEO Atul D. Rane said that it was in advanced discussions with Jakarta on a deal worth $200 million to $350 million under which it had offered to supply shore-based missiles and a version that can be mounted on warships.

"I have a team right now in Jakarta," Rane told Reuters in an interview, adding that a deal could be in place within the year. "The defence forces of Indonesia are extremely interested."

A spokesperson for Indonesian Defence Minister Prabowo Subianto on Wednesday declined to give immediate comment and said he needed to first check the information.

BrahMos is also aiming to land a follow-on order of around $300 million with the Philippines, where its missiles are scheduled to be delivered to the Philippine Marine Corps starting at the end of 2023, Rane said.

"The Philippines themselves have sort of indicated to us that this is just an ice breaker," Rane said, referring to the 2022 sale. "They are looking at more systems."

A spokesperson for the Philippine Department of National Defence did not immediately respond to a request for comment.

DEFENCE SPENDING

In response to a growing Chinese maritime presence in the South China Sea and some surrounding areas, Indonesia and the Philippines have ramped up their spending on the procurement of weapons and other military equipment, according to data from defence intelligence company Janes.

Indonesia's investment in the acquisition of new weapons grew by nearly 28% in 2021 and 69% in 2022, while the Philippines saw a rise of 29% in 2021 and 40% in 2022 - far higher than the average in Southeast Asia, the data shows.

"Territorial disputes with China have been a major concern for most of the Southeast Asian countries which is driving their defence budget to meet their security requirements," said Akash Pratim Debbarma, an aerospace and defence analyst at GlobalData.

Much of Southeast Asia's new military purchases come from traditional suppliers, including the United States, France and Russia, but India - the world's largest defence importer - and BrahMos are trying to make inroads.

"We have got the go-ahead to market to every country in southeast Asia from both the government of India and the government of Russia," said Rane.

BrahMos was established through an inter-governmental agreement in 1998 as a joint venture between India's state-run Defence Research and Development Organisation and NPO Mashinostroyenia of Russia.

Western-led sanctions against Russia for its invasion of Ukraine have not impacted BrahMos production or planning, said Rane.

Although BrahMos missiles still depend on Russian parts and raw material, Rane said the percentage of local input had gone up to over 70% from around 15% at the start of the venture.