Indonesia initiates $450 million BrahMos missile export deal: On January 11, 2025, it was reported that Indonesia's defence ministry has formally initiated a $450 million deal to acquire BrahMos missiles from India.

As per the sources, the EXIM (Export-Import) Bank was initially scheduled to process the loan to Indonesia. However, this did not materialise.

It is pertinent to note that Indonesia had joined the BRICS, an intergovernmental organisation consisting of 10 countries, on January 6 last year. Indonesia’s entry into the BRICS — which consists of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates — paves the way for Indian Rupee-Indonesian Rupiah transactions.

This development comes as Indonesia seeks to enhance its military capabilities amid regional tensions, particularly regarding China's assertiveness in the South China Sea. The Indonesian government has communicated its intent through a letter sent to the Indian embassy in Jakarta. Additionally, India is reportedly offering a loan to facilitate this purchase, potentially through the State Bank of India or other national banks.

This deal marks a significant step for both nations in terms of defence collaboration. Indonesia will become the second Southeast Asian country to procure the BrahMos missile system, following the Philippines, which previously signed a deal worth approximately $374 million. The BrahMos missile is known for its speed and precision, making it a critical asset for Indonesia as it modernizes its military forces.

Political Implications of The Deal

The acquisition of BrahMos missiles will significantly bolster Indonesia's military capabilities, allowing it to better defend its territorial integrity, particularly in the South China Sea where tensions with China have been escalating. This development may lead to a more assertive Indonesian posture in regional security matters, potentially altering the balance of power in Southeast Asia.

The deal could trigger an arms race in the region, prompting neighbouring countries to enhance their military capabilities in response. Countries like Malaysia and Vietnam may feel pressured to procure advanced weaponry to maintain their strategic deterrence against Indonesia's enhanced military capabilities, thereby increasing regional militarization.

Indonesia's strengthening military capabilities may shift the dynamics within the Association of Southeast Asian Nations (ASEAN). While ASEAN promotes collective security and cooperation, an arms build-up by one member could lead to divisions or tensions among member states, complicating diplomatic relations and collaborative security efforts.

This deal underscores Indonesia's growing defence ties with India, signalling a potential shift in alliances within the Indo-Pacific region. As both nations seek to counterbalance China's influence, their partnership could lead to deeper military cooperation and joint exercises, further solidifying their strategic alignment.

The acquisition of advanced missile technology by Indonesia could be perceived as a threat by China, potentially exacerbating tensions in the region. This might lead to increased military posturing by China in response, including naval operations and military exercises near Indonesian waters.

NIE