By Amb. Gurjit Singh (R)
One key expectation from Indonesian President Prabowo Subianto’s visit as the chief guest for India’s Republic Day celebrations in 2025 was a significant advancement in the India-Indonesia defense relationship.
Prabowo Subianto, a strong advocate of Indian defense technology, had previously visited India during the pandemic as Indonesia’s defense minister under President Joko Widodo.
During this earlier visit, he expressed a keen interest in strengthening bilateral defense ties. However, while hopes were high for tangible outcomes during this visit, the announcements fell short of expectations. As is often the case with Indonesia, progress in formalizing agreements tends to be slow.
Prabowo did promise to prioritize engagement with India by easing bureaucratic hurdles, thereby facilitating smoother cooperation. He also emphasized the importance of regular meetings through established mechanisms like the defense ministers’ dialogue and the joint defense committee.
While the lack of immediate breakthroughs may have been disappointing, this commitment to streamlining discussions and processes can still be considered a positive outcome.
The buildup to the visit raised hopes that Indonesia would finalize its long-pending interest in acquiring the BrahMos missile system.
Indonesia has been an early aspirant among ASEAN nations for the BrahMos, but unlike the Philippines—whose procurement process has been quicker—Indonesia has yet to move forward decisively.
Despite the delays, interest remains strong. Notably, a delegation led by the Indonesian naval chief, Admiral Muhammad Ali, visited India concurrently, following an invitation from India’s naval chief, Admiral Dinesh K Tripathi, who had visited Jakarta in December 2024. During the visit, the Indonesian naval chief toured the BrahMos facility and other institutions, including the Information Fusion Centre-Indian Ocean Region (IFC-IOR) in Gurugram.
The most significant outcome of this visit appears to be Indonesia’s renewed interest and intent to organize its processes to engage effectively with India.
Two important developments were acknowledged: First, the Ratification of the Defence Agreement, which was originally signed in 2018. The agreement has finally been ratified, reflecting progress despite the delay.
Secondly, the placement of an Indonesian Officer at the Information Fusion Centre (IFC). This long-standing invitation from India has now been accepted, though it remains unclear if the nomination process for the officer has begun.
Beyond the BrahMos, India and Indonesia have numerous opportunities for defense collaboration. For over 15 years, the two countries have conducted successful coordinated patrols between Sumatra and the Andaman Islands, with its 43rd edition in December 2024.
Military and naval exercises like Garuda Shakti and Samudra Shakti have been conducted, and Indonesia has shown an increasing willingness to participate in multinational exercises like Milan. Similarly, India has participated in Indonesia’s Komodo exercises in the Natuna Sea since 2014.
However, it is essential for the relationship to progress beyond joint exercises and patrols. Indonesia has expressed a growing need for defense technology and production capabilities, including an interest in importing and potentially manufacturing products locally.
Areas of potential collaboration include trainer aircraft, Prachanda helicopters, artillery self-propelled guns, small arms and ammunition, coastal battery missiles, and Coast Guard vessels.
Photo Courtesy: Vijainder K Thakur
Economic factors also play a crucial role in the defense relationship. Indonesia currently runs a significant trade surplus with India, largely due to its exports of palm oil and coal—resources vital for India’s growing economy.
Indian investment in Indonesia far exceeds Indonesian investment in India. While nearly 700,000 Indian tourists visit Indonesia annually, the number of Indonesian tourists visiting India is negligible.
India does have an edge in service exports, but the overall economic relationship is structurally imbalanced. Increased defense trade, such as Indonesia importing Indian equipment and technology, could help address this imbalance and create a more complementary partnership.
Challenges In Defense Deals
Several factors hinder the swift conclusion of defense deals between India and Indonesia, even as countries like France, Turkey, and South Korea appear to have smoother pathways.
Two primary challenges are Understanding Indonesia’s Procurement Processes and the Lack of a Viable Financial Package.
Indonesia’s decision-making processes often require the involvement of agents. While Indian companies are legally constrained in their dealings, the use of agents can help navigate Indonesia’s complex procurement system. However, India’s reluctance to utilize such intermediaries has been a drawback. Indian companies are allowed to pay coming up to a threshold, and this needs to be better utilized.
Despite Indonesia’s robust GDP, the country prefers staggered payments for government procurements. Other countries offering defense equipment, such as France, South Korea, and Turkey, have successfully structured financial packages that align with Indonesia’s preferences.
Indonesia finds it difficult to utilize India’s conventional line of credit. Instead, a concessional yet commercially viable credit line—one that does not require Indonesia to provide a sovereign guarantee—might be more effective even if denominated in INR.
To address this challenge, India requires close coordination between the Ministry of Defense (MoD), Indian defense manufacturers, banks, and financial institutions, with support from the Ministry of External Affairs (MEA) and the Ministry of Finance.
Indian companies exporting defense equipment should take the lead by leveraging their balance sheets to support attractive financial packages.
The Strategic Opportunity
Indonesia’s cautious approach to dealing with China and its balanced stance toward the U.S. in defense procurement provides India with a strategic opportunity.
By offering tailored solutions—both in terms of technology and financing—India can deepen its defense relationship with Indonesia while reducing its trade imbalance.
With the groundwork for regular dialogue and improved processes now in place, the India-Indonesia defense partnership is poised for growth. The challenge lies in translating intent into action through practical measures and sustained engagement.
- Gurjit Singh is a former Ambassador to Germany, Indonesia, Ethiopia, ASEAN, and the African Union Chair, CII Task Force on Trilateral Cooperation in Africa, Professor, IIT Indore.
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