Our previous report’s comment that ‘security issues in India continue to be overshadowed by the deterioration of the political and internal security situation in Pakistan,’ could not have been more prescient given the events of November 2008, when 173 people were killed and scores more injured in terrorist attacks blamed on a Pakistan-based group.

Although Pakistani President Asif Ali Zardari continues to insist that there is no direct evidence that the Mumbai attackers were trained by terrorists in Pakistan, he has vowed to weed out those responsible, and has arrested dozens of suspects in connection with the attacks. Employing a similar carrot and stick approach to the situation, India’s defence minister has moved to allay widespread fears of war with Pakistan, but also promised that unless its neighbour takes action against terrorists who are operating against India, in particular those who are behind the latest attack on Mumbai, ‘things will not be normal’.

India’s most concrete reaction to events in Mumbai has been the joint military operation undertaken with Chinese forces in early December. With the terrorists having entered India by sea, India’s defence minister has held a series of talks with the country’s navy to discuss how security along its 7,516km long coastline can be enhanced. In another maritime development, November saw the Indian navy get approval to pursue pirates into Somali waters. The navy said it would also consider sending more warships to the region, where international anti-piracy forces are already active.

The fate of the nuclear pact with the US continues to be in the hands of the US congress, which has been using the deal as a leverage to influence India to limit its burgeoning relationship with Iran. It is the perceived realignment of India, still nominally a non-aligned state, towards US foreign policy which has provoked the anger of the communists. The deal brings considerable gains for India in the form of nuclear fuel and technology, which will have a sizeable impact on the government’s effort to expand power supply in line with rocketing demand, but it is unlikely that the Indian National Congress (INC) will be rewarded for this in the upcoming elections. Moreover, increasing military and defence co-operation with the US and Israel could create a rival axis to the expected Chinese regional dominance, and offer India a greater range of arms for procurement.

In a separate political development, India and Russia agreed to extend their Inter-Governmental Commission for Military and Technical Co-operation by another 10 years to 2020 from 2010.

Although India has been the largest importer of conventional arms among developing nations, its military exports are comparatively negligible, and in Q408 incoming weapons technology continued to dominate newsflow.

Boeing said in October that it would bid for US$20bn in defence aircraft orders over the next 10 years, and in the previous month Russian Defence Minister Anatoly Serdyukov raised the idea of lending India a nuclear submarine.