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It not about capacity, its about political or strategic control. More correctly its indian insecurity, feeling that in some way China is encroaching into "indian sphere of influence". What indians need to understand is Bangladesh will buy what it thinks it needs and can afford from where ever, regardless of what india thinks or says.
1. Bangladesh has a very small defence budget, and only spends around 1.2% of its GDP on defence, even less then myanmar which is a third its size. So it has to buy where it can get value for money, China and Russia.
2. India really does not have that many exportable/marketable weapon systems (ALH, Bhramos are only a few), plus a exporter needs to provide timely delivery, support, training, finance, marketing etc...not something indian PSU are good at.
3. Even if india could provide comparable solutions, no nation would purchase systems developed from a potential threat.
Now, no Bangladeshi would argue that india is ten times our size or that we could win a war with india. What we dont like is indians telling us what we can or cant do. And as our economy grows we will be able to afford more and more weapons, whether its chinese or its russian is upto us.
He has a point gslv. Our PSU's are notoriously inefficient and have capacity constraints on account of less investment in production facilities. They can barely keep up the production rate required to fulfill India's needs let alone be able to export on time.Non sense.Truth is you can't afford them.Can you afford a Kolkata class destroyer or a shivalik class frigate?You mostly buy used ships.
We have lost many an export order of even basic equipment like assault rifles and ammo because of PSU's could not increase production capacity as arming India's forces takes priority over exports.
There are some notable exceptions to this, but on the whole it is true.
What is happening however is that GoI is encouraging and private Companies are setting up defense production units. This will remove the problem of capacity constraints within a decade, we would be far better placed to export military equipments then compared to now.