Last week, Russian President Vladimir Putin accused Western countries and defense contractors of harming Russia’s defense exports. His comments come after the United States and European Union have imposed sanctions on Russian arms manufacturers, limiting the scope of selling weapons to the U.S. allies. Putin said competition in the defense export market had become “noticeably more intense” of late.

Russia Seeks To Bolster Arms Exports To Asia Amid 'Unfair Rivalry'

Russia needs to keep its people employed

Putin feels that it has become “twice as difficult” for Russian defense manufacturers to bag new orders under politically motivated situations. However, Moscow is still one of the world’s largest defense exporters. According to the latest report from the Stockholm International Peace Research Institute (SIPRI), more than 60% of Moscow’s arms exports go to Asia and Oceania. It currently sits on an order book worth over $50 billion, mainly from Asian countries.

Russia’s defense sector employs about 3 million people, and contributes 20% to the country’s total manufacturing output. Even though Russia’s defense industry is nowhere as big as that of the Soviet Union, it needs to keep selling weapons to keep 3 million people employed, and to generate revenue that can be used in defense R&D. So, Moscow is trying to step-up military exports to Asia.

China and India strengthening domestic production

China and India are two largest buyers of military equipment from Moscow. Between 2010 and 2014, India accounted for 39% of Russia’s arms exports while China represented 11% of Russian arms transfers. Moscow is co-designing and co-developing a fifth-generation fighter jet based on Sukhoi T-50 PAK FA with India. It is also co-developing a military transport aircraft with New Delhi. Meanwhile, it is selling advanced rocket engines for the Chinese space program.

Pyotr Topychkanov, an analyst at the Carnegie Moscow Center, told Defense News that Russia may enjoy a bigger share of the Asian arms market as it offers attractive conditions for its deals. Moscow is also seeking to close military equipment deals with Vietnam, Malaysia, Indonesia, Pakistan, and Myanmar.

However, China has successfully reverse-engineered most of the Russian military equipment, and has started manufacturing them domestically. India is also developing domestic military-industrial complexes to reduce dependence on imports. The problem is other countries don’t have funds to compensate the potential loss of business with China and India.