Regional Outlook : Hard Times Quash India’s Military Dreams : The country hoped to dominate Asian air and seas. But budget woes altered plans, and many nations are relieved.

It was with deliberate drama and flourish that then-Prime Minister Rajiv Gandhi stood atop the conning tower of a Soviet-built nuclear submarine on the morning of Feb. 3, 1988, and proclaimed to the region and the world that India’s military might was finally coming of age.

“Those who conquered us from the sea ruled us as alien masters,” he declared that day to the applause of India’s senior naval officers. “And if we are to keep the destiny of India in our hands, we must have full control of the waters around us.

“We will not be left behind.”

With that, Gandhi christened the latest in India’s then-burgeoning armada, a permanently leased Charlie I-class Soviet nuclear submarine with ballistic missile capacity, almost unlimited nautical range and the carefully chosen name, INS Chakra--the Hindi-language word for “the vortex of psychic power.”

The ceremony sent instant shock waves across the Indian Ocean. Indonesia, located just 80 nautical miles south of India’s southernmost island naval base, protested openly that it appeared India was determined to build an expansionist navy. Thailand and the wealthy island state of Singapore immediately turned to building up their own fleets. And similar concern swept through the rest of Southeast Asia, nations long suspicious of India’s true military intentions in the region.

As far away as Washington, the U.S. State Department dubbed India’s latest nuclear acquisition “an unfortunate development.” Japan watched with quiet but growing anxiety. And Australia, further troubled by India’s high-profile program to develop and build its own, indigenous aircraft carrier in addition to the two it already had on the high seas, decided to reopen its defense attache office in New Delhi. It seemed a wise move to better monitor a nation that had made clear its ambitions to build a blue-water navy and assert itself as the regional superpower--”the biggest boy on the block,” as one Western military analyst here put it at the time.

But that was more than three years ago--before the Indian economy went broke this year; before the Soviet empire that has been India’s largest military supplier all but collapsed and before India bit the bullet in its latest national budget, which cuts defense spending for the first time in years. All that in a nation that ranked as the largest single arms importer on the globe during the 1980s.

Today, the aircraft carrier program seems for all practical purposes to have been scrapped. The two other carriers, each of them more than 40 years old, can barely stay afloat.

India actually had to politely refuse a U.S. Navy invitation for an Indian vessel to show the reach of the Indian flag and visit San Francisco harbor last year because New Delhi simply could not afford the fuel.

And the INS Chakra--the nuclear sub that had sent such sudden ripples of fear regionwide in early 1988--was sent back to the Soviet port of Vladivostok earlier this year after Moscow suggested that the Indians were not maintaining it properly.

In short, India’s onetime ambition to dominate the air and sea for hundreds of miles around it and assert itself as the policeman of the Indian Ocean has all but drowned under the weight of its own mounting deficits and crises.

“The net effect of all of this is, there are very difficult times ahead for the Indian defense system,” conceded retired Indian air force Commodore Jasjit Singh, an avid supporter of the military buildup who now heads India’s Institute of Defense Studies and Analyses.

“We should have the capacity to withstand that for a few years, but the question then becomes, what happens after that? I don’t have an answer for that, and I think no one has an answer for that yet.”

But, for the nearly dozen nations that once feared the worst from their big neighbor, India’s faltering pursuit of pre-eminent power is seen as bringing a far brighter prospect of prolonged peace in South and Southeast Asia.

“Taken as a whole, there is now a huge, collective sigh of relief in the region,” said one Western military analyst based in New Delhi. “The entire region is now much more relaxed with India’s maritime military power.”

Beneath the surface, though, there is another powerful message in India’s inevitable decision to pull in its military horns this year. And, for the Third World as a whole, it is perhaps the most far-reaching corollary of what has come to be known as the new world order.

It is this: In a world of interdependent economies in which a single power increasingly dominates, military might--even at the regional level--is impossible without the economic strength to back it.

“Looking back on the heydays of India’s military expansion, it’s clear it was all about India wanting to be taken seriously,” the Western analyst continued. “With 800 million mouths to feed and poverty at every turn, no one would ever take them seriously as an economic power, so militarily they tried to dominate the region.”

Another Western diplomat added, “All of this was really an exercise in exalting national pride. India has suffered from an inferiority complex since forever, and that’s why you get things like their peaceful nuclear explosion in 1974.

“But the reality is you cannot afford any longer to keep a military at any level of predominance without the economy to sustain (it). And, given India’s economic situation more than anything else, I think there will now be a fairly steady military decline, not only in India but also in Pakistan and the rest of the region as well.”

Indeed, from the Indian perspective, it has been not simply the force of nationalism but its rivalry with its western neighbor, Pakistan, that has long fueled its military buildup. Pakistan, which was carved out as a new Islamic state when India became independent from Britain in 1947, has fought three wars with its larger and better-armed neighbor, each of them ending in a draw.

Since the last war ended in 1971, both nations have been engaged in an arms race that includes aggressive, though largely clandestine, nuclear weapons programs. India successfully tested a nuclear bomb in its desert state of Rajasthan nearly two decades ago, and Pakistan is believed to be so close to nuclear weapons capability that the U.S Congress voted to cut all aid to Islamabad over the issue last October.

It was largely against that nuclear backdrop that India’s aggressive weapons acquisition programs of the ‘80s struck such deep fears among its other neighbors.

The statistics were awesome: India’s annual defense budget more than tripled between 1980 and 1990; it purchased a record $18 billion worth of arms during the same period, including $1 billion worth of field artillery from Sweden, more than $1 billion in submarines from Britain and billions more in sophisticated aircraft from the Soviet Union. And it opened mass-production facilities for tanks and fighter aircraft under agreements with Moscow.

So vast and rapid was its military expansion that, by early 1989, Time magazine proclaimed India “The Regional Superpower” in a story that stood in awe of the country’s newfound military muscle.

Many in India encouraged such talk. But while relatively formidable, it turned out that some of those headlines may have been misleading.

Correcting for inflation, the actual level of the country’s arms imports were never as high as India’s critics suggest. And most independent analysts say today that the country’s military buildup was, as one put it, “more perception than reality.”

“Is India today a regional superpower? The real question is, compared to whom?” said a ranking Western military analyst in the region. “Compared to Sri Lanka, Bangladesh, Nepal or, really, even Pakistan, yes, it is the regional power to reckon with. Compared to China? No. Compared to Indonesia? No.”

As examples, the analysts cite not just the quiet phase-out of India’s nuclear submarine lease with Moscow and its all-but-scrapped indigenous aircraft carrier program, but the whole range of military research and development programs that have sent shivers through the region.

From long-range ballistic missiles, light combat aircraft and space satellite launch vehicles to machine guns, mortars and main battle tanks, India’s Defense Research and Development Organization has been hard at work on an array of indigenous military products.

In reality, though, few of those projects have come to fruition, and criticism of the DRDO and its slow pace of development has been mounting this year.

“Main battle tank reaches nowhere after 17 years,” declared the headline on one recent newspaper account of how, after nearly two decades and $100 million in expenditures, the agency still hasn’t finished plans for the engine of India’s first indigenous tank. Domestic production of MIG-21 fighter jets, a joint Indo-Soviet project, is being sharply questioned after 14 of the aircraft crashed this year alone.

The lack of indigenous technology and production compounds the economic dilemma facing the Indian military. Without an internal production base, India must look toward imports to expand militarily. And that means foreign exchange, which is in short supply.

Such economic constraints are the main obstacles preventing the United States and other Western powers from drawing India away from its traditional military reliance and loose alliance with Moscow.

“If the U.S. (arms) manufacturers could afford to take peanuts and cloth in payment, the Americans would dominate the market here very quickly,” observed one Western analyst, adding that Washington and New Delhi have gradually come closer in regional, strategic thinking. “It still could happen down the road. But--in the short term, at any rate--India’s own internal economic compulsions will dominate.”

For India, those compulsions would suggest that the solution for a continued military buildup still lies in its traditional ally to the north. Yet it is the upheaval in the Soviet capital that even Indian defense analysts now point to as the nation’s ultimate hurdle on the military front.

“There’s a danger India might feel even more isolated and insecure because of this, and that’s not a good thing. It may be more likely to disregard regional or international considerations--like the man who goes mad and shoots up a shopping mall,” the Western military analyst said. “Or, with a defense budget going down and the paranoia going up, India might figure, ‘If we can’t afford a conventional buildup, let’s put it all in non-conventional--nuclear, biological and chemical.”

Still, analysts like Singh have found at least one potential silver lining in the clouds that have engulfed the Indian military during this year of setbacks and scale-downs--the future of India’s relations with the United States.

“It’s no longer the Cold War situation, in which every time we got another Soviet ship, the Pentagon counted it as one more negative point in the zero-sum game,” Singh observed. “What is more, a Russia that is close to the West will also be close to India. . . . “

“It’s unlikely, of course, that the three of us will ever form a strategic consensus. But even if it looks grim for us at the moment, everything that is happening in India and in the Indo-Soviet relationship today should be seen as positive developments, not only in our own region but in Washington, as well.”