India, Indonesia working to conclude $450 mn rupee-rupiah transaction for BrahMos missiles; announcement likely on R-Day

India and Indonesia are working to conclude a $450 million defence deal- one that would be pathbreaking because it is likely to be settled via a rupee-rupiah transaction.

The Rs 4,000 crore deal that New Delhi and Jakarta are looking to finalise is for the missiles produced by BrahMos Aerospace, a joint venture between India’s DRDO and Russia’s NPO Mashinostroyeniya.

The Indonesian government has sent a formal letter for the acquisition of these BrahMos munitions, the fastest supersonic missiles in the world, Firstpost has learned.

Financing arrangement between India, Indonesia

For financing the deal, initially, the plan was for the Export Import Bank of India– Exim Bank– to provide the loan to Indonesia. However, it has not materialised due to certain intricacies, one of the sources confirmed.

India is instead offering a loan to Indonesia from either SBI or another Indian national bank, it has been learned.

Specifics of the deal are currently being worked out.

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Announcement likely on Republic Day

Indonesia officially joined the BRICS group of countries that India and Russia are both founding members of earlier this week. The development has paved the way for a rupee-rupiah transaction for settling the deal.

Once the details are finalised, and “if all aspects go according to plan, an announcement could be expected during India’s Republic Day 2025,” an MEA source handling the background preparations for the deal said.

The Indonesian president is reportedly set to be the Chief Guest at the Republic Day Parade in India on January 26.

India-Indonesia defence partnership

New Delhi and Jakarta have been stepping up cooperation in the defence sector, since the signing of the comprehensive strategic partnership in 2018.

The two nations have engaged in bilateral naval exercises– Samudra Shakti– since that year.

In April last year, the first-ever “India-Indonesia Defence Industry Exhibition-cum-Seminar” was organised in Jakarta.

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For the Southeast Asian nation, boosting its defence capability has become a necessity in light of China’s ever-growing belligerence towards other nations in the region, like the Philippines, in the disputed waters of the South China Sea. Indonesia and China also have overlapping claims in the Natuna Sea.

For India, it is a chance to boost its footprint in its extended backyard, Southeast Asia. According to a 2024 survey by Singapore-based the ISEAS – Yusof Ishak Institute, the Association of Southeast Asian Nations (ASEAN) see India as one of the least strategically relevant countries in the region.

New Delhi has been working to change that.