Joining the arms race in India

Partnership for ammunition supplies

Germany-based company Diehl Defence and the Indian company Reliance Defence Limited announced on 10 June that they had signed a strategic cooperation agreement for the production of precision-guided Vulcano 155 mm ammunition in India.[1] The projectiles are equipped with GPS technology and laser-assisted targeting. This will improve the Indian Army’s capabilities in the field of precision weapons. According to business reports, Reliance Defence expects to enjoy sales of up to one billion US dollars.[2] The agreement between Diehl and Reliance was reported just a few days after the announcement on 22 May of another strategic partnership, namely between Rheinmetall AG and Reliance Defence Ltd.. Under this partnership agreement, Reliance will take on the production of explosives and propellants for medium and large-calibre ammunition and provide supplies for Rheinmetall.[3] The strategic partnership also gives Rheinmetall access to key raw materials and will help to secure the German company’s supply chains. There are plans to widen this collaboration going forward. However, the actual time frame and total value of the agreement are not yet known.

Ambitious plans

As part of its collaboration with Diehl Defence and Rheinmetall, Reliance Defence will build its own production facility in Dhirubhai Ambani Defence City in the Indian state of Maharashtra. The plant, which will be one of the largest in South Asia, is to manufacture precision-guided ammunition. The plan is to achieve an annual production capacity of up to 200,000 artillery shells, 10,000 tonnes of explosives and 2,000 tonnes of propellants which will be supplied to Rheinmetall. These two contracts bring the number of Reliance’s international defence partnerships to a total of four. Reliance has previously entered into joint ventures with Dassault Aviation and Thales Group, both based in France. The contracts reflect the ambition of the young and still inexperienced Reliance Defence to turn itself into one of the leading players in the rapidly growing Indian defence sector. For their part, both Diehl and Rheinmetall want to benefit from the Indian government’s aim of driving up defence exports  to reach a volume of some 5 billion US dollars by 2029.[4]

Detaching India from Russia

The deals between Rheinmetall and Diehl with Reliance Defence are part of Germany’s efforts, intensified since 2022, to reduce India’s high dependence on Russian arms imports. Back in February 2023, during his trip to India, then-Chancellor Olaf Scholz called for New Delhi to give greater support for Western attempts to isolate Russia. This, he proposed, could include increased arms procurement from Germany.[5] Then, in June 2023, Defence Minister Boris Pistorius said during his to India, “It is not in Germany’s interest for India to remain dependent on arms supplies from Russia in the long term.” He persuaded India to look into arms deals with Germany.[6] Discussions with Pistorius led to the signing of a memorandum of understanding between the two countries on the construction of six non-nuclear submarines in India. The work is to be carried out jointly by Germany’s ThyssenKrupp Marine Systems (TKMS) and India’s Mazagon.[7] With the adoption of the paper ‘Focus on India’ by the German government in October 2024, the intention to orient India “more strongly towards German arms companies" was, finally, explicitly linked to the goal of reducing India’s “arms policy orientation towards Russia”.[8] At the same time, both countries expanded their practical military cooperation, including joint air and naval manoeuvres in and around the Indian Ocean.

Chengdu J-10C vs Rafale

The recent military conflict between India and Pakistan is seen as a test case for the clash between Western and Chinese military technology. This conflict has further intensified competition for a share of the large Indian defence market.[9] The clashes lasted four days, with both sides deploying their most advanced arsenal, including their latest fighter jets.[10] According to a number of reports, the Pakistani Air Force succeeded in shooting down one or more Indian Air Force Rafale fighter jets with the help of Chinese-made J-10C fighter jets. Both jets are classified as 4.5 generation fighters, i.e. already incorporating some fifth-generation technologies.[11] Since that brief confrontation, the US has also been stepping up its push to sell more arms to India, including the offer of fifth-generation F-35 fighter jets. Shortly before the conflict, India had signed a multi-billion-dollar agreement with France to purchase 26 additional Rafale fighter jets, which are to replace the Russian MiG 29K fighters.[12] Russia responded by offering India the sale of its Su-57, also a fifth-generation fighter jet. Unlike the US, however, Russia offered to produce the jets in India, including technology transfer, which is what the Indian government is looking for. This deal would enable India to equip the aircraft with domestic radar and weapon systems.[13] Apart from the submarine deal, Germany has not – compared to France and the US – been able to secure really big arms contracts from India, the world’s largest importer of military equipment.

Reliance, the controversial Indian giant

Reliance Defence Ltd. is a subsidiary of Reliance Infrastructure Ltd., which in turn is part of the Reliance Group.[14] The Reliance Group is one of India’s leading conglomerates with assets totalling around 47 billion US dollars and a large financial base of almost eight million shareholders.[15] It has a wide range of subsidiaries including Reliance Communications, Reliance Capital, Reliance Power, Reliance Defence and Engineering Limited, and Reliance Defence Technologies Private Limited. The group has a controversial past. It is owned by Anil Ambani, a mogul who was ranked sixth richest person in the world in 2008.[16] In 2019, it was in debt to various investors to the tune of some two billion US dollars.[17] In 2020, Anil Ambani was forced to declare bankruptcy in a British court after being sued by three Chinese banks for unpaid loans amounting to 700 million US dollars. He had also been dealt a serious blow by the Swedish telecommunications company Ericsson, which sued one of his companies for unpaid bills in 2019. In this case, Anil Ambani was only saved from a prison sentence by his older brother Mukesh Ambani, now the richest person in India,[18] who intervened and settled the debt.

Notable compensation deals

The crisis-ridden Reliance Group received a lifeline from Indian Prime Minister Narendra Modi in the form of a highly overpriced arms contract with the French company Dassault Aviation for the purchase of 36 Rafale fighter jets worth a total of 8.8 billion US dollars.[19] Under the contract, which was signed in April 2015, the Reliance Group was announced as a compensation partner. This means Dassault was to reinvest a very large portion of the proceeds in Reliance to procure further defence equipment and strengthen domestic production capacities. This role was accorded to the Reliance Group despite its lack of experience in the defence sector. In fact, the Reliance Group established its armaments subsidiary Reliance Defence Limited only thirteen days before the announcement of the agreement with Dassault. A few days after the agreement was signed, the Reliance Group established Dassault Reliance Aerospace Limited, a joint venture that was to become Dassault’s most important offset partner. The Ambani Group, which was heavily indebted and had no experience in aerospace, suddenly became the guarantor of a multi-billion-dollar aerospace business.

[1] Diehl Defence und Reliance Defence stärken strategische Partnerschaft. diehl.com 10.06.2025.

[2] Reliance Infra eyeing revenue worth ₹10,000 cr after contract with Germany’s Diehl. financialexpress.com 10.06.2025.

[3] German-Indian cooperation: Rheinmetall and Reliance enter into strategic partnership. rheinmetall.com 21.05.2025.

[4] Anil Ambani’s Reliance Defence signs pact with German firm for artillery shells, explosives supply. indianexpress.com 22.05.2025.

[5] Ashok Sharma, Frank Jordans: German leader seeks Indian support for Russia’s isolation. apnews.com 25.02.2023.

[6] Deutschland offen für Waffenlieferungen an Indien. dw.com 05.06.2023.

[7] thyssenkrupp Marine Systems und Mazagon Dock Shipbuilders Limited erklären Absicht zum Bau von U-Booten für und in Indien. thyssenkrupp.com 07.06.2023.

[8] The Federal Government: Focus on India. Berlin, October 2024.

[9] Tom Hussain: Why a Pakistan-India war would be a Chinese vs Western arms proving ground. scmp.com 30.04.2025.

[10] Ajai Shukla: The 100-hour War: India Versus Pakistan. thediplomat.com 09.06.2025.

[11] Memphis Barker: How China helped Pakistan shoot down Indian fighter jets. telegraph.co.uk 08.05.2025.

[12] India says signs deal with France for 26 Rafale fighter jets. france24.com 28.04.2025.

[13] Rashi Randev: Russia’s Su-57 deal can be a game-changer for India’s defence manufacturing. firstpost.com 10.06.2025.

[14] About Us. rinfra.com.

[15] Anil Dhirubhai Ambani, Chairman – Reliance Group. relianceada.com.

[16] The downfall of Anil Ambani: $42 billion net worth to zero in 12 years. thenewsminute.com 11.02.2020.

[17] Mrinal Dwivedi: The Fall of a Billionaire: What Really Happened to Anil Ambani and the Brutal Lessons Every Young Entrepreneur Must Learn. msn.com 13.06.2025.

[18] Mukesh Ambani. forbes.com.

[19] Shailendra Bhojak: On a Wing and a Prayer. caravanmagazine.in 05.09.2018.