Document 8

ECONOMICS-II PROJECT
DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY
SABBAVARAM, VISAKHAPATNAM,
A.P., INDIA
PROJECT TITLE:
IMPACT OF ARMS SMUGGLIN ON INDIAN ECONOMY
SUBJECT:
ECONOMICS
NAME OF THE FACULTY:
Prof. ABHISHEK SINHA
NAME OF THE CANDIDATE:
PALURU NIKHIL VYAS
ROLL NUMBER
2018LLB061
SEMESTER:
3rd SEMESTER
ACKNOWLEDGMENT:
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I am high1y indebted to my Hon’b1e History Economis Professor, Prof. Abhishek Sinha, for
giving me a wonderfu1 opportunity to work on the topic: “CRITICAL ANALYSIS OF THE
FIREARMS TRAFFICKING ON ECONOMY”, and it is because 0f his exce11ent know1edge,
experience and guidance, this project is made with great interest and effort. I wou1d a1so 1ike to
thank my seniors who have guided my novice know1edge of doing research on such significant
topic. I wou1d a1so take this as an opportunity to thank my parents for their support at all times.
I express my sincere gratitude to each and every person who have guided and suggested me
whi1e conducting my research work.
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CERTIFICATE OF DECLARATION
I hereby declare that this project titled “CRITICAL ANALYSIS OF FIREARMS

TRAFFICKING ON ECONOMY” undertaken by me is an origina1 work has duly
acknow1edged all the sources and re1evant information. This project is free from any kind of
plagiarism.
Date:
Place: Visakhapatnam
Signature of the Researcher Signature of the Facu1ty
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TABLE OF CONTENTS:
1. INTRODUCTION………………………………………………….………………5
2. BACKGROUND OF COUNTRIES INVOLVED IN
FIREARMS TRAFFICKING……………………………………………………..5
3. ARMS PROVIDERS………………………………………………………………5
3.1 United States
3.2 Russia
3.3 China
3.4 Western Europe
3.5 Arms Purchasers
3.6 Africa
3.7 Libya
3.8 Sudan and South Sudan
3.9 Middle East
3.10 Latin America
4. THE LEGAL AND THE ILLEGAL ARMS
MARKET………………………………………………………………….…….10
5. THE GLOBAL PRINCIPLES OF THE ARMS TRADE TREATY,……… 12
6. REFLECT INDIA’S VALUES AND CONSTITUTION……………..………13
7. LACK OF REGULATION OF THE INTERNATIONAL ARMS …………14
8. THE RISE OF INSECURITY…………………………………………...……..14
9. EFFORTS TO TACKLE THE PROBLEM……………………………..……15
10. RECOVERY OF ARMS FROM TERRORISTS/ MILITANTS IN
JAMMU AND KASHMIR, 1990–2004………………………………………. 15
11. INDIA’S DEFENCE INDUSTRY……………………………………….……..16
12. CONCLUSION.....................................................................................................18
13. BIBLIOGRPAHY……………………………………………………………….18
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Introduction:
Trafficking firearms involves the manufacture and illegal distribution of firearms, their
components and ammunition. The firearms that are usually most trafficked are: (i) Small arms
(revolvers and self-loading pistols, rifles and carbines, sub-machine guns, assault rifles, and light
machine guns) and (ii) light weapons (heavy machine guns, grenade launchers, portable anti-tank
and anti-aircraft guns, recoilless rifles, portable anti-tank missile and rocket launchers, portable
anti-aircraft missile launchers, and mortars of less than 100 mm caliber).1 According to a brief
elaborated by the Council on Foreign Relations of United States a 2012 issues, the financial
value of the illegal trafficking of small arms and light weapons is worth $1 Billion per year,
higher than the value reported in 2010 by the United Nations Office on Drugs and Crime, which
estimated a value of this criminal market between $170 Million and $320 Million. 2 The
international trend of illegal trade of firearms usually goes from developed countries that
manufacture and sell the guns, to purchasers in developing countries, especially in countries with
high demand of guns due to civil and domestic conflicts or small wars. In those countries, the
guns are also resold and smuggled, usually to neighbor territories. Bearing this in mind, the aim
of this paper is to introduce the main characteristics of this illegal activity, related to the social,
economic and politic background of the countries or regions involved. The document conveys
information about (i) general background characteristics of some of the most involved countries
or regions and (ii) relevant data about firearms trafficking in those territories.1
Background of countries involved in Firearms Trafficking:
Currently, trafficking of arms occurs almost in every region of the world; however, this
trafficking is usually focused in areas affected by intense domestic conflicts, violence or
presence of organized crime and criminal networks, where the demand for illicit weapons is
higher.3 As a result, most of the sales (almost 75%) are targeted to developing countries located
in (i) Africa, mainly Libya, Sudan and South Africa, (ii) Middle East, mainly Saudi Arabia and
Syria, and (iii) Latin America, mainly Central America. 4 The 5 permanent members of the UN
Security Council (US, Russia, France, United Kingdom and China), together with Germany and
Italy, account for around 85% of the arms sold between 2004 and 2011, a trend that currently
remains stable. The high participation of these countries is relevant because while trafficking of
arms has been usually conducted by private entities or actors, these governments contribute to
boost the criminal market by arming paramilitary groups involved in insurgencies against rival
governments, often conducted in contravention of United Nations arms embargoes.2
Arms providers
The countries with an important participation in the legitimate arms market are also,
usually, the producers and therefore providers of trafficked guns. Specifically, between 2011 and
2014, United States and Russia dominated the arms market in developing nations, with both
countries leading the ranking on the value of arms transfer agreements. China and some
1
Varshney-Wilkinson Dataset on Hindu-Muslim Violence in India, 1950-1995, Version 2
2
.
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countries in West Europe, such as France, United Kingdom, Italy and Germany, have also
participated arming subversive or paramilitary groups developing nations
As a result, the main producers and distributors of guns worldwide, have in common that are
developed nations, with leading economies7 , a very high human development8 , and a high level
of income.
United States
Unites States currently leads the expenditure of weapons worldwide, in fact, according to
the Stockholm International Peace Research Institute, among the top 20 global weapon dealers,
16 are U.S. corporations, including: (1) Lockheed Martin, (2) Boening, (3) Northrop Grumman,
(4) General Dynamics and (5) Raytheon . In 2014, The United Sates ranked first in arms transfer
agreements with developing nations, with a participation of $29.8 billion or 48.2% of these
agreements. Between 2007 and 2014, the highest purchase orders in firearms happened in the
Near East (58.2% of arm transfer agreements) and Asia (32,2% of arm transfer agreements)
Regarding the involvement of United States in gun trafficking worldwide, in 2012 a study found
out that almost 70% of firearms recovered in Mexico between 2007 and 2012 were traced to the
US. Most of these firearms were not manufactured in the United States; however, loose state gun
and ammunition control laws in the southern states happened to favor the gun smuggling towards
Mexico.
Russia
Russia is the second source of armament worldwide. Between 2007 and 2014 Russia
made $41.7 billion in arms trade agreements. Also, in 2014 this country ranked first in the value
of arms delivered to developing nations, with $8.4 billion or 40.8% of such deliveries. Also in
2014, Russian arms agreements with developing nations included two Kilo submarines valued on
$1.2 billion and around 200 T-90 battle tanks for approximately a value of $1 billion with
Algeria, S-400 air defense systems totaling nearly $3 billion with China, and antitank shells
valued on $432 million with India.3
The capture of Viktor Bout in April 2002, the single biggest private arms trader in the
world, pointed out the involvement of Russia in firearms trafficking. This Russian citizen
established his business after the collapse of Soviet Union, he purchased a fleet of Soviet military
aircraft including Antonov and Ilyushin cargo planes as surplus of the Cold War and employed
them in operations to deliver firearms to various combatants in Africa, and anti-Taliban forces in
Afghanistan during the 1990s. According to United Nation documents, in exchange for illicit
diamonds, Viktor Bout supplied weapons to Liberian President Charles Taylor to destabilize
Sierra Leone. Also Viktor Bout supplied arms to both sides in the Angolan civil war and
delivered weapons to various warlords across Central and North Africa. Operating through
Eastern Europe, Bout transported weapons through Bulgaria, Moldova and Ukraine to Liberia
and Angola until he got arrested in 2002.
China
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From 2011 to 2014, the value of China’s arms transfer agreements with developing
nations was approximately of $3 billion annually. In 2014, the total of China’s arms agreements
had a value of $2.2 billion. Most of these agreements can be partially attributed to continuing
contracts with Pakistan, a key historic client. Rather than large agreement for major weapons,
China had several smaller valued weapons deals in Asia, Africa, and the Near East. This
situation is related to the lower level of sophistication of Chinese weapons, in contrast to those
weapons produced in Russia or United States. Regarding the involvement of firearms trafficking,
in 2014 it was discovered the case of a mining magnate committing mafia-style crimes, including
gunrunning, with the support of corrupt officials who worked for the state. Liu Han, the magnate,
and his younger brother Liu Yong were related to an investigation for murder, assault, illegal
detention, interference in state functions, affray, extortion, gambling, illegally buying and selling
guns, illegal gun ownership and fraud.14 In 2015, an organized firearm gang of 24 suspects was
dismantled in China’s Hubei Province. The suspects were accused of manufacturing, selling
(primary online) and possessing guns without license. In the process, 23 guns, 70 rifle bullets,
135 hunting gun bullets, 10,000 buck shots and 1,000 pieces of gun- manufacturing components
were seized. 4
Western Europe
France, the United Kingdom, Germany, and Italy—the four main West European
arms suppliers—have supplied a wide variety of sophisticated weapons to a number of
purchasers. The four suppliers, as a group, registered a significant decrease in their collective
share of their arms transfer agreements with developing nations between 2013 and 2014. This
group fell from 25.4% in 2013 to 9.5% in 2014 of arm trades agreements. Of these four nations,
France was the leading supplier with $4.3 billion in agreements in 2014. Italy, meanwhile
registered $800 million in arms agreements in 2014. All of them can produce both advanced and
basic air, ground, and naval weapons systems.16 Although these nations have strong laws and
regulations to confront gunrunning, the terrorist attacks in France, 2015, evidenced a gun
trafficking ring operating in West Europe. Investigations carried out by the Europol and the
French police suggest that weapons flow from Russia via the Balkan states into the rest of
Europe. Also, according to Europol, many weapons trafficked in West Europe come from the
western Balkans after being held illegally after armed conflicts in the region.
Arms Purchasers
According to a United States Congress study, developing nations continue to be the
primary target of foreign arms sales activity by weapons suppliers. Between 2007 and 2010, the
value of arms transfer agreements with developing countries comprised 74.4% worldwide
Between 2011 and 2014, the percentage increased to 75.5% of all these agreements globally and
in 2014 it reached 86.0%.18 As previously stated, trafficking of fire arms is a significant issue in
Africa (mainly in Libya, Sudan and South Sudan), Middle East (mainly Syria), and Latin
America (mainly Central America). These regions and countries where the traffic of firearms
takes place share the common characteristic of experiencing high levels of unemployment and
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poverty19 , medium of low human development level20 , income inequality21 and systemic
corruption. Also, these territories are or recently were involved in armed conflicts, and usually
have a strong presence of gangs and organized crime that demand guns to perform criminal
activities.
Africa
The political and economic instability of African Countries related to forming states and
democracies, as well as the persistent inequality in land property and income, the intense
corruption and a low level of human development, among other local situations, have fueled the
emergence of armed conflicts across the continent.22 Before 2012, due to intense situations of
violence, Mali, Somalia and South Africa were the main hotspots for firearms trafficking, while
now the focus of this criminal activity turned to Libya and Sudan.
Libya
According to The United Nations, Libya is the epicenter of the illegal weapons trade
including MANPADs [portable air defense systems], which fuels conflicts in at least 14
countries worldwide. According to The panel of experts of The UN, the main obstacles to
contain the proliferation of illicit weapons are the difficulty of controlling non-state armed actors
over the majority of stockpiles in Libya (currently three ports in the country are controlled by
rebel groups) as well as ineffective border control systems. As a consequence of the inability to
secure its borders, Libya has let weapons to be handed to radical groups, fueling the conflict,
terrorism and insecurity in almost every continent.
Sudan and South Sudan
According to The Guardian, Sudan and South Sudan are some of the most heavily
armed countries in the world. Sudan, in fact, is known as the “Africa’s arms dump” due to the
high number of arms related to the armed conflict between government forces, paramilitaries,
rebels, militia, foreign fighters, bandits as well as inter- and intra-communal warfare. Global
arms trade and smuggling from neighboring states is one of the issues intensifying the situation
of violence in Sudan.
In South Sudan, for instance, ownership of guns and small arms has increased during its
three years as an independent nation. Arms and ammunition are openly available in local markets
across the country, at very affordable (around US$1 per cartridge). The increase in gun
ownership is partly due to the number of rebel and militia groups that have recently emerged
The spread of firearms in Sudan and the trade of illegal weapons are related to Liberation
movements, especially those in neighboring countries. For many years’ liberation movements
and valley people of the Turkana of Kenya, the Dodoth of Uganda and the Toposa of South
Sudan, have traded arms across the three countries’ borders. According to Jonah Leff, Director
of Operations at Conflict Armament Research, most of the traded arms in Sudan and South
Sudan are small guns such as AK-type assault rifles. PKM machine guns and RPGs are also
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available, but in much smaller quantities. Even so, German HK G3 rifles sometimes cross the
border from Ethiopia and Kenya.5
Middle East
Conflict areas in the Middle East, and especially the strong and increasing presence of
extremist groups during the last decade, have fueled the firearms trafficking in the region.
However, although radical groups are the ones performing trading weapons illegally, there is
evidence of the involvement of Departments of Security of countries with economic or political
interest in the region. For instance, it was recently uncovered that in 2012 the State Department
of the United States moved guns off the radar from Libya (Benghazi Port) through Turkey to
Syria, to support Islamic revolutionary groups there.25 In fact, corporate media reports that ISIS
in Iraq received many of its weapons due to the Iraqi retreat from Mosul. ISIS, however, already
had plenty of weapons before the takeover, mostly from the United States. Jamal Maarouf, leader
of the Syrian Revolutionary Front (SRF), claimed that the U.S. provided weapons to them. Also,
al-Nusra (al-Qaeda-linked group) and other terrorist groups in Syria have received weapons
indirectly from the SRF. Abu Bakr al-Baghdadi, the leader of ISIS, helped in the creation of al-
Nusra, so when the group was dissolved, its members integrated to ISIS, which means that pre-
ISIS members have indirectly received weapons from United States.
Latin America
The high demand of weapons in Latin America is related to organized crime activity,
especially to drug trafficking. Mexico is currently one of the countries with an increasing number
of illegal weapons seized in the border with United States. According to the Mexican annual
report elaborated by the Attorney General Office27 , 60% of all confiscated weapons in Mexico
are mainly seized in the states of Tamaulipas, Guerrero, and Jalisco, with 7 out of 10 weapons
confiscated coming from the United States. According to the Small Arms Survey Report, 2013,
the illicit trade in firearms in Mexico’s border with United States is likely to be at least 100–200
units per day, or 35,000–70,000 units each year. These weapons usually end up in the hands of
drug trafficking organizations members who are willing to purchase powerful weapons, such as .
223 and 7.62 × 39 mm caliber rifles, 5.7 × 28 caliber rifles and pistols, and .50 caliber rifles’.
From January 2009 to July 2011, 75 per cent of firearms reportedly bound for Mexico and seized
at the US border were rifles, shotguns, and machine guns. The ratio of handguns to other
firearms seized at the border is also similar to the ratio of handguns seized in Mexico, accounting
for 24 per cent of seized firearms (vs. 28 per cent for firearms seized in Mexico.). This could
indicate the suspicions that United States is one of the main sources of weapons smuggled in
Mexico Among the seized weapons, fragmentation grenades, rockets, and anti-personnel mines
were also found. Convictions include members of criminal networks such as Sinaloa Cartel, Los
Rojos, The Jalisco Cartel - New Generation (CJNG), Los Zetas, The Pacific Cartel, and the
Knights Templar29, among others. Due to Gangs activity, Nicaragua, Honduras and El Salvador
also report a relevant presence of trafficked firearms and ammunitions. The illegal trade of guns
in this region is strongly related to systemic corruption of state officers and law enforcers. For
instance, in September 2015, a former coronel, Roberto Pineda Guerra, was arrested for running
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a stockpile of weapons in El Salvador.30 In Colombia, the traffic of firearms is specially related

to the armed conflict subversive and paramilitary forces, as well as criminal gangs. In the case of
the FARC guerrilla (Fuerzas Armadas Revolucionarias de Colombia), there is evidence that
weapons were mainly traded from United States and Eastern Europe, and smuggled through
Venezuela and Brazil.6
The Legal and the Illegal Arms Market

In analysing the weapons market and the Colombian market, it is first necessary to
distinguish between two opposing but related factors: the licit and the illicit weapons markets.
There are at present in Colombia approximately 1,250,000 firearms in the hands of civilians
holding some type of licence, without including those held by the State’s security forces.
Authorized firearms in the hands of civilians are legally purchased from INDUMIL, the small
State-owned firearms industry, which is the sole legal producer and importer of firearms in the
country. Firearms acquired by civilians are also illegally imported or purchased on the domestic
black market and later legalized and registered with INDUMIL, which is also responsible for
maintaining lists in the firearms register. In Colombia, because of the lack of strict regulations,
there has, over the years, been an extensive proliferation in firearms, in legally registered
weapons and in automatic and semi-automatic weapons, which are supposedly for the exclusive
use of the State’s security forces. In 1993, a new measure on firearms control entered into force
which established two distinct categories of firearms licences: the first, possession of a firearm,
limits the possession of a firearm to the house or the workplace; and the second, licence to carry
firearms, allows a person to load the firearm. The former licence is valid for up to ten years and
may be issued for one or two firearms. 7
The latter must be renewed annually, allows only one firearm per person and requires
proof that the firearm is essential for self-defence. This firearms control measure includes an
amnesty and a period of grace for the registration and legalization of previously acquired
firearms. At present, there are approximately 919,759 registered firearms with licences to carry
firearms and 334,152 with licences to possess firearms. This new measure has in some degree
enabled the Government to begin to collate its own information and to gain a clearer idea of the
extent of the problem. Despite controls, however, many civilians, including some of the agents
mentioned as being involved in the five stages of the drugs trafficking chain, obtain their arms
from the legal market and end up using them for illegal purposes. It is estimated that the number
of illegal firearms has reached five million, although most experts calculate the number to be
roughly three million. Moreover, the illegal arms market in Colombia has grown considerably in
the last ten years, and this increase is largely related to the needs generated by irregular groups
involved in the internal arms conflict. In contrast to other leftist insurgent groups in Latin
America, the Colombian guerrillas have received little support from outside the country,
especially in the way of weapons. Certain Central American countries have served as training
6
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www.economicsandpeace.org
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grounds during the 1980s for Colombian guerrillas; and, although the former Soviet Union and
its allies maintained close political links with armed insurgents, Colombia was never a priority
for the Communist bloc. 8
For this reason, and for many years, the guerrillas’ weaponry was rudimentary and
was acquired through combat and not as part of an elaborate strategy connected with the
international arms trade. With the end of the cold war, countless weapons and munitions, brought
to Central America over the past ten years, are now part of a huge black market—Nicaragua, El
Salvador and Panama—which has been infiltrated by Colombian guerrillas. The various
international arms supply sources for guerrillas are reflected in the various types of arms that its
members use in combat—from G-3s, Galils and Uzis to AK-47s and M-16s. Another possible
source are the drugs cartels which, due to the structure that they possess for importing various
weapons, do not hesitate to do business with guerrillas. The growth and power of these drugs
cartels have turned them into large arms importers. Although their needs are different, as
mentioned earlier, these weapons, usually small arms, are acquired in various parts of the world
through intermediaries. In this way, the drugs trade is protected and a demand is created for
small arms. An apparently common method of obtaining these arms is the exchange of drugs for
weapons, in which process the same secret air routes are used to bring the drugs and take away
the weapons. And, just as drugs money is laundered, illegal weapons are easily transferred and
sold at a price. As the drugs cartels seek other markets, mainly in Europe, the supply bosses will
probably switch to arms buying. If these small and light arms continue to be easily obtained on
the black market and to be routinely used by drug traffickers, guerrillas and paramilitary groups,
they will also be used by common criminals and civilians who will feel threatened by being
surrounded by so many arms.
All the above-mentioned weapons can be classified as small arms, which demonstrates
that whilst unflagging efforts are being made with regard to nuclear and strategic weapons, very
little has been done in the field of small arms. It is evident that the so-called drugs industry is
much more complex than has been described here and that the illicit drugs trade has infiltrated
local economies. It is also clear that the interrelationships between drugs and arms are numerous
and diversified and that they reflect the very complex nature of these issues.
More sophisticated weapons are obtained and they are intended more specifically for
use in the drug trafficking trade. “Chichipatos” and “traquetos” generally carry high-calibre
pistols for self-defence, and the couriers are accompanied by bodyguards armed with similar
weapons as well as with automatic and semi-automatic weapons. The cartels, which in their turn
dominate the transport aspect of the trade, also seek small and sophisticated arms to enable their
bodyguards to move around the large cities in which they carry out their operations with the
necessary discretion. Although some light and automatic weapons are used, the arms
requirements of the drug barons are not of such a military nature as the communications media
sometimes portray them as being. For small-scale drugs traffickers, and these are the majority,
weapons are often undesirable, because they attract unwanted attention on the part of the
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authorities. At one stage, the Medellín cartel set up an elaborate terrorist organization, under the
command of Pablo Escobar, using dynamite in car bombs and groups of men hired to engage in
violent combat against the Colombian State at the end of the 1980s and the beginning of the
1990s. With the death of Pablo Escobar and the dismantling of his organization, the use of high
explosives by drugs traffickers and the scourge of terrorism have diminished.9
The Global Principles of the Arms Trade Treaty reflect India’s values and Constitution
Rajiv Gandhi’s statement reflected India’s belief that arms control was a key aspect
of a foreign policy based on interdependence and the promotion of peace and stability. These
principles were based on the Directive Principles of State Policy set out in India’s Constitution:
‘Promotion of international peace and security —The State shall Endeavour to— (a) Promote
international peace and security; (b) Maintain just and honourable relations between nations; (c)
Foster respect for international law and treaty obligations in the dealings of organized peoples
with one another; and (d) Encourage settlement of international disputes by arbitration.’ 2 India
has traditionally supported initiatives to control arms. In 1959, India called for the United
Nations to pay attention to the existence of large armaments and the unchecked growth of arms,
which posed a threat to international peace and security. In 1965, India along with seven other
nations, called for an international treaty based on the principles of non-proliferation – this treaty
was to be a step towards achievement of general and complete disarmament. India was one of the
first countries to ratify the Biological Weapons Convention of 1974.10
India is also an original signatory to the Chemical Weapons Convention, having signed
it on 14 January 1993, and was among the first 65 countries to ratify the Treaty. Recent years
have seen a departure from India’s earlier emphasis on disarmament. In 2005, India became the
world’s tenth largest military spender. In the words of one Minister, ‘India needs to become self-
reliant in Defence Production to effectively meet the fast changing ground realities of defence
operations. India also needs to keep pace with the changes taking place by induction of new
equipment, up-gradation of existing military hardware and changing over to new strategies and
tactics’.3 However, the Government of India has continued to speak up for international law,
stating that human rights are an ‘Ancient concept [found in the] Vedas, Puranas and other ancient
literature [and are an] essential ingredient of Indian culture and ethos.’ It was this heritage, and
the legacies of Buddha, Ashoka, Tagore, and Gandhi that led Martin Luther King in 1959 to say:
‘To other countries I may go as a tourist, but to India I come as a pilgrim’, and Nelson Mandela
in 1980 to praise India for an ‘exemplary role in world affairs’.4 Now, as India emerges as a
global power, people across the developing world look to India to champion the voices of the
world’s poor, with countries like Cambodia and Kenya, and Nobel Laureates like Archbishop
Desmond Tutu and Oscar Arias, seeking India’s support for an Arms Trade Treaty. The ATT
would prohibit states from authorising arms transfers where there is a clear risk that the weapons
could be used in violation of the UN Charter or to commit serious abuses of human rights,
serious violations of international humanitarian law, acts of genocide, or crimes against
9
Inter-University Consortium for Political and Social Research (ICPSR) Official Website.
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humanity. This is in line with India’s Constitution and values which aim to hold back those
dictators and armed militants who place no value on human life. The call for an international
Arms Trade Treaty has been supported by eminent Indians from all walks of life including Nobel
Prize-winning economist Amartya Sen, Honorary President of the International Inter-
Parliamentarian Union Dr Najma Heptullah, and former Scientific Advisor to the Prime Minister
Professor M. G. K. Menon. In the words of Admiral L. Ramdas, Chief of Naval Staff from 1990
to 1993: ‘As someone who has served in the Indian Navy around the world, I have seen the
human cost of conflict and instability fuelled by uncontrolled arms sales.11
An Arms Trade Treaty is a crucial aspect of ensuring security for India and the
whole world.’5 Ordinary Indians, too, are backing the call. In a six-country Ipsos MORI survey
this year, 90 per cent of Indians agreed that there should be strict controls on where weapons can
be exported to.6 Already, 20,000 Indians have given their ‘faces’ to a huge photo petition in
support of an Arms Trade Treaty, part of a worldwide petition of over a million people from 160
countries. The idea of an Arms Trade Treaty recognises the reality that in an ever more
interdependent world, instability and violence anywhere can undermine development and
security everywhere.
Lack of regulation of the international arms trade is hurting India’s citizens
‘Any weapon has only one purpose…to destroy something. My legs are lifeless; I have
no sensation in them. Only the wheelchair ensures my mobility. Everything that Kashmir had in
the past has been ruined in the last 15-20 years. There has been so much armed conflict…so
many guns, so many weapons…they are freely available… that all humanity is destroyed. Today
a human being has no value.
From the legal to the illegal:
The arms trade was one of the first to globalise, and yet there are still more regulations
on the international trade in music than on the international trade in arms7. One of the
consequences of this is that weapons often move from the legal trade to the illegal trade – in fact,
80 per cent of the world’s illegal weapons start off as legal weapons. The arms trade often works
through long supply chains that go through several middlemen, so that a weapon may be made
legally in country A, be sold to a legal buyer in country B, resold to another legal buyer in
country C, resold to an illegal trader in that country and then smuggled to criminals or armed
militants in country D. And, in recent years, India has often found itself in the position of country
D, with civilians suffering at the hands of men with illegal weapons produced in a country where
the first sale in the chain was legal. Yet, the countries in which the weapons were first
manufactured take no responsibility for their use later in the chain. Currently, in the absence of
an Arms Trade Treaty there is nothing that can be done to stop this. However, if the ATT is
signed, India could establish obligations for all countries in the supply chain of these weapons.
The whole weapons chain needs to be tackled, not just the last link.12
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Where do weapons come from?

India is part of a region that is flooded with arms. According to the United Nations, India
is home to about 40 million firearms. The primary source for the proliferation of weapons in
south Asia was the first Afghanistan war, with a further arms source in south-east Asia. The
known countries of origin of illicit arms uncovered in north-east India are: China, USA, Russia,
Belgium, UK, Czeckoslovakia, Pakistan, Afghanistan, Thailand, Cambodia, and Bangladesh.
Many of these weapons have ended up with non-state actors in India. The biggest arms haul
destined for India to date was seized off the coast near Chittagong in Bangladesh, in April 2004.
The haul – worth an estimated US$4.5m–$7m – included around 2,000 automatic and semi-
automatic weapons, among them 1,290 Type 56-1/Type 56-2 Kalashnikov-type assault rifles;
150 T-69 rocket propelled grenade (RPG) launchers; quantities of 40mm RPG ammunition;
25,000 hand-grenades; and 1.8m rounds of small-arms ammunition. The shipment came via
Hong Kong to Singapore8. According to Bangladeshi press reports, it included weapons of both
Israeli and US manufacture. The shipment was then transported north through the Strait of
Malacca to be transferred in the Bay of Bengal to two trawlers, the Kazaddan and Amanat, which
ferried the weaponry to a jetty on the Karnapuli River, Chittagong. Most of the weapons that
were seized in Chittagong were reportedly destined for the armed groups operating in north-east
India. To date there is no explanation as to where those weapons are. An Arms Trade Treaty will
require countries to be responsible for the ultimate destination of such weapons. As things stand,
we can trace a lost suitcase more easily than a weapon that has moved from the legal to illegal
trade.
A Gun Runner’s Route Source of weapons:

I) Tammu Bazaar, at the Indo–Burmese border II) Mandalay Price of the weapons: Rs 600 for a
Chinese hand-grenade; Rs 25 per unit for ammunition. Place to be supplied: The gun runner was
due to supply to a woman based in Churachandpur in Manipur, north-east India, from where it
would be sent to Dimapur in Nagaland, another state in north-east India. Source: B. Nepram,
South Asia's Fractured Frontier (Mittal Publications, 2002).
Easy availability of arms helps fuel the ongoing conflicts – north-east separatists, Kashmiri
separatists, and Naxalites have all been able to get hold of foreign-made weapons through
middlemen. Armed violence by Naxalites has killed 1594 people in 2005.9 Naxalite groups now
have access to the AK series of rifles, landmines, and improvised explosive devices (IEDs),
among others. Though there are also ‘Cottage industry’ pistols, known as ‘kattas’ produced using
a variety of ordinary items, including plumbing pipes and jeep steering columns these home-
made weapons lack the ‘quality’ of foreign-made weapons and are a disappointing second choice
for men who want to achieve power through fear and violence.13
13
14 | P a g e
The rise of insecurity

The spread of illegal arms in India is fuelling demand for legal arms, as desperate
citizens seek refuge in the false promise that arming themselves will protect them from attack.
The majority of the estimated 40 million firearms in India are in civilian possession. In the
Indian state of Uttar Pradesh alone, there are 900,000 arms licence holders, and the number of
arms dealers is at present pegged at around 1,400. In the words of a gun dealer , ‘Gun shops are
mushrooming in the state like public telephone booths’.10 Such insecurity exacerbates poverty:
the promises set out in the Government of India’s Common Minimum Programme (CMP) cannot
be met in the context of instability fuelled by uncontrolled weapons. The lack of an international
Arms Trade Treaty is exacerbating this crisis by making it easier for criminals and militants in
India to obtain weapons.14
Efforts to tackle the problem
India has laws governing small arms but these have not been able to prevent a
flood of arms. According to the latest official report available, the Ministry of Home Affairs
Annual Report 2001–2002, a drive to curb unlicensed and illicit arms in June 2001 saw only 30
people arrested. In Uttar Pradesh and Bihar, criminals have established substantial armed groups.
Despite its stringent regulation of arms transfers, exports and imports, India still faces the
problem of weapons which are smuggled into the country by various groups. The seizures of
these weapons, though not by any means a true measure of the real extent of illicit weapons
trafficking, assist the authorities in a statistical assessment of the size of the problem. For
example, in Jammu and Kashmir and the north-eastern areas alone, the security forces have,
since 1990, seized approximately 39,000 AK series (see box below). The markings and types of
weapons confiscated clearly indicate that these are brought into India through illicit channels
from outside the country. ‘Arms captured in Jammu and Kashmir can equip nearly four to five
divisions of battalions in India. In Bihar a pistol can be bought for a price varying from Rs 2500
to Rs 4000 while a carbine fetches Rs 5,000. An AK rifle costs 1 lakh and more. In the state of
Manipur, an armed group, the United National Liberation Front (UNLF) has over 2,500 weapons
in its armoury. This includes grenade launchers, assault rifles of the AK series, rocket propelled
guns’ (Air Commodore Prashant Dikshit (Retd), Defence Analyst).
Recovery of Arms from Terrorists/ Militants in Jammu and Kashmir, 1990–2004
AK Rifles & Pistols: 36, 273
Universal Machine Guns: 996
Rocket Launchers: 774
Source: Ministry of Home Affairs Report, 2003–2004
14
Positive Peace Report 2017 Published by Institute For Economics and Peace.
15 | P a g e
On 15 January 2005, the Indian army seized a huge cache of arms in the state of Manipur in the
north-east. Raids on the ‘general headquarters’ of the Peoples’ Liberation Army, the biggest
armed group in Manipur, led to the recovery of 77 weapons, including 56 Kalashnikov rifles.
India cannot tackle this problem through domestic legislation alone but needs other
countries to play their part too, and the best framework for this is an international Arms Trade
Treaty that would commit all countries to shared standards and promote responsibility
throughout the weapons supply chains. The ATT would oblige states to ensure that all arms
transfers are authorised by all governments involved in the transfer. This is quite simply the
requirement that states exercise control over the weapons that pass, by any means, from their
jurisdiction to another jurisdiction. It means that each agreement for the provision of weapons
must be reviewed individually, and each scrutinised in light of other obligations under
international law. An Arms Trade Treaty would make it harder for weapons to move from the
legal to illegal trade and would help make India safer. 15
India’s defence industry
India has the largest defence industry on the subcontinent (see the figure below which
illustrates defence expenditure over recent years). This makes the country's stateowned
munitions factories a significant source of arms exports to smaller neighbouring nations, such as
Nepal, Myanmar (Burma), and the Maldives.12 The Government is now seeking a more global
scope for arms exports. India is also the largest arms importer in the developing world,
purchasing some $15bn in weapons every year, a figure expected to rise to $50bn by 2015, and is
now developing closer ties with other international arms suppliers. In the past several years, the
Government of India has ushered in phased liberalisation to the defence industry. According to
the Defence Minister, the Government has come up with a policy on strengthening arms
production. In a recent speech the Minister said: ‘Today, India is going through an epochal
transformation and is emerging as a formidable economic and political power. We are confident
in facing the global challenges in the new economic milieu and are moving forward to scale
greater heights. While India's progress on the economic front is a welcome sign, it needs to
equally address its strategic and security concerns. India needs to become self-reliant in Defence
Production to effectively meet the fast changing ground realities of defence operations.
Impact of arms smuggling

According to Economists, the already damaged Indian economy due to the global financial
crisis will be further affected by the recent terrorist attacks in the city of Mumbai, however, the
impact of the attacks on the economy is expected to be short lived.
15
Positive Peace Report 2017 Published by Institute For Economics and Peace
16 | P a g e

Even though Mumbai suffers from a considerable poor population sectarianism, it has
managed to transform itself from a city known for textiles and kitschy, to a powerful financial
capital that serves as a gateway for India to the rest of the world. Mumbai’s economy, which
contributes as much as 5% of India’s $1 trillion GDP and nearly a third of its direct taxes,
stands as a beacon of India’s success in integrating itself in the global economy. In the recent
past, this has made the city a more attractive target for terrorists that desire to shed India’s
success. In 2003, 60 people were killed by car bombs, and in 1992 and 1993, Hindu-Muslim
riots claimed another 1,000. In July 2006, 187 people were killed as coordinated bombs ripped
through commuter trains in the crowded city.

Throughout all the obstacles that Mumbai has faced, it has still managed to become a
prominent capital of Asian finance that rivals Hong Kong and Tokyo. Its stock exchange is
among the world’s busiest, its banking community is the envy of South Asia, and its
restaurants and nightlife are comparable to those of any global cultural capital.

As a result of the global financial meltdown, India’s economy had already started to contract
prior to the November 29th attacks. GDP growth rates had already fallen from 7.9% in the first
quarter of the current financial year to 7.6% in the second quarter. Moreover, the overall
growth rate for the first half of the current year showed regressing figures (7.8%) when
compared to the previous year (9.3%) . Fear had already spread in the city of Mumbai; fears of
losing one’s job or home. Thus, the terrorists attacks of Mumbai arrived at a time when fear
was already an epidemic in the city.

As a result of the economic crisis, the mood of business in India has turned highly
pessimistic. Citibank estimates that GDP growth will be 6.8% in 2008-2009 and 5.5% in the
next fiscal year. Goldman Sachs and Merrill Lynch expect 2009-2010 growth to be 5.8%,
Nomura believes it will be 5.3% and First Global puts it at an alarmingly low of 3.5%.

In October, exports fell down by 12.1%. It is highly unlikely<!—likely or unlikely? just
making sure—> that the $200 billion target for 2008-2009 will be missed. The ABN AMRO
Purchasing Managers’ Index, an early indicator of the mood of manufacturing, is at its lowest
since it was set up in April 2005, indicating that manufacturers are bearish.

Taking one specific sector as an example; vehicle sales ware estimated to slide by 25.5% in
the last three months of the calendar year and by more than 34% in January-March 2009.
Moreover, the Real estate market is also suffering, and the Bombay Stock Exchange (BSE)
Sensex has been hovering around 9,000, a far cry from the 21,000 it had crossed in January.

Looking on the brighter side of things, Inflation, fell to 8.40% for the week ending on
November 22, from almost 13% in August. This allowed the Reserve Bank of India (RBI) the
benefit of focusing on boosting growth rather than fighting inflation. RBI governor D.
Subbarao, announced a 1% cut in the lending rate, effective December 8, where the rate at
which the RBI lends money to banks now stands at 6.5% The government has, meanwhile, cut
the controlled price of petrol and other petro-products due to the fall in inflation. Furthermore,
17 | P a g e
the Indian central government has also been announcing ingredients of a stimulus package to
help boost the economy.

On that Friday, when terrorists still held hostages just a few blocks away, the Bombay Stock
Exchange resumed its activity. The markets flared up in patriotic defiance, with the benchmark
Sensex index closing up 66 points on a day when most expected it to drop. However, with
GDP growth slowing to 7.6% and foreign institutional investors withdrawing more than $13
billion from its equity markets, India’s economy has already yielded defeat, leaving its Sensex
at less than half where it stood a year ago.

With all this loss that India incurred, it will take a while for things to go back to the way they
used to. For three days after the incident, trains have run empty, schools and offices have
remained closed, and Bombay’s residents, heeding a call from the government, have stayed
indoors. On the next Friday afternoon, when some of the fear started to fade away and
considerable public activity was witnessed, a false alarm about more armed gunmen at train
stations sent back the city’s residents into quivering fear. Despite all these happenings, it is
highly unlikely % of GDP. Hence, an affected tourism sector will impact the overall economy.
Furthermore, holiday destinations such as Goa, are feeling the pinch even more because of
intelligence reports suggesting that they could be future targets for terrorists. Hotel occupancy
has gone down 25% and rates plunged in western India. Civil aviation is another sector in the
dumps. But it was already troubled prior to the attacks.

Overall damage to India’s economy is indeed significant. Analysts have already started
giving initial estimates that suggest the loss in business due to the attacks to be about $100
billion, arising from crucial institutions, such as the stock exchanges, commodities and money
markets, and business and commercial establishments which remained closed. Furthermore, the
foreign exchange front got hit by $20 billion. Even though the terrorist attacks were
devastating to the city and its people, it is just a matter of time before the situation worsens, as
harsher consequences are expected on the long run. While the short-term impact is easy to
predict, what happens down the line remains impossible to assess.
Conclusion
The arms trade is out of control, fuelling conflict and poverty around the world. There
is an emerging call for the governments of the world to agree to an international Arms Trade
Treaty (ATT). India should back this call for an Arms Trade Treaty because: • The Global
Principles of the Arms Trade Treaty reflect India’s values and Constitution • Lack of regulation
of the international arms trade is hurting India’s citizens • An Arms Trade Treaty would not end
India’ s arms production and trade but only require good practice by all countries. Indian Nobel
Laureate Amartya Sen wrote in the International Herald Tribune in June 2006: ‘My own country,
India, has good reason to use whatever influence it has, especially with the growing recognition
of its importance in the global world. This is not only because reduction of armed conflicts fits
well into the global objectives that were championed by India when it struggled for
18 | P a g e
independence and sought a global voice, but also because India itself suffers a great deal from
the illicit movement of arms that feed local insurrections and terrorist acts’. 17 In a world awash
with uncontrolled weapons of death and destruction, it is time to find solutions. A globally-
agreed understanding to regulate the arms trade can be a way out of the crisis. India’s leadership
in this is critical because it is a victim but also because its voice is heard by the G8 and the rest of
the developing world. India’s role at the UN General Assembly in October 2006 will be closely
watched by the world. India’s Prime Minister Manmohan Singh is conscious of India’s global
presence. In his speech to the UN General Assembly in 2004, he noted, ‘ What is required for the
international community to successfully deal with global challenges, whether they be security
challenges, economic challenges or challenges in the sphere of the environment, are the
existence of international institutions and a culture of genuine multilateralism…each of us has to
be prepared to take on new obligations and larger responsibilities relevant to the needs of our
times…we are confident that in an inextricably interdependent world that we live in, our
commitment to the common good…will be resolute and firm.
Firearms trafficking, or gunrunning occurs almost in every region of the world, but is
focused specially in war zones or territories affected by high levels of violence and organized
crime activities.
• The flow trend of firearms trafficking occurs mainly from developed countries to developing
countries. The main suppliers of weapons are, in order, the United States, Russia, China, France
Italy and Germany. The main receivers of illegal weapon trade are developing nations, especially
in Africa, Middle East and Latin America.
• The smuggling of weapons in conflict zones has destabilized several regions, and currently
boosts the rise of extremist groups and, therefore, global insecurity. The main effects in terms of
violence and political instability are observed in Africa, where efforts to consolidate democracy
are constantly undermined by intense corruption, criminal activity and flows of trafficked
firearms.
• The border between the United States and Mexico is the main hotspot for firearms trafficking
in the Western Hemisphere. The fact that the proportion of handguns vs. firearms seized in the
border is similar to the proportion seized inside Mexico, indicates that there is a constant
trafficking flow across the border, feeding the fire capacity demands of Mexican criminal
networks. The convergence of
(i) a legal gun market across the United States,
(ii) (ii) intense drug trafficking activity, and
(iii) (iii) complex criminal networks operating across Mexico, make the US-Mexico
border and “hyperborder”32 with several trafficking flows that include movement of
humans (specially migrants), money, arms, drugs and hydrocarbons.
• While most of illegal gun suppliers are private actors and entities, evidence suggests that the
involvement of governments, deliberatively arming groups of nations in conflict, intensifies the
global trafficking and destabilization of several countries.
19 | P a g e
BIBLIOGRAPHY:
BOOKS:
1. UN’s 2005 Human Development Report
2. New Perspectives Quarterly, 25, 2008.
3. Positive Peace Report 2017 Published by Institute For Economics and Peace.
ONLINE RESOURCES:
1. Amartya Sen, International Herald Tribune in June 2006.
2. INFO@ECONOMICSANDPEACE.ORG
3. visionofhumanity.org/reports
20 | P a g e

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ECONOMICS-II PROJECT

DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

IMPACT OF ARMS SMUGGLIN ON INDIAN ECONOMY

NAME OF THE FACULTY:

Prof. ABHISHEK SINHA

NAME OF THE CANDIDATE:

PALURU NIKHIL VYAS

I hereby declare that this project titled “CRITICAL ANALYSIS OF FIREARMS

Signature of the Researcher Signature of the Facu1ty

a stockpile of weapons in El Salvador.30 In Colombia, the traffic of firearms is specially related

The Legal and the Illegal Arms Market

Where do weapons come from?

A Gun Runner’s Route Source of weapons:

The rise of insecurity

Impact of arms smuggling

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