How much have the defence sales from India increased in the past five years? What are the factors which contributed to the growth?
The story so far: India’s defence exports have increased from ₹1,521 crore in 2016-17 to ₹8,434.84 crore in 2020-21. The figure stood at ₹10,745 crore in 2018-19. The Government has set an ambitious target to achieve exports of about ₹35,000 crore ($5 billion) in aerospace and defence goods and services by 2025.
Which Indian companies are major exporters?
While giving out the value of defence exports, Minister of State for Defence Ajay Bhatt said in a written reply to the Rajya Sabha earlier this week, “Further, the names of the major defence items exported cannot be divulged due to strategic reasons”.
THE GIST
- India’s defence exports have increased from ₹1,521 cr in 2016-17 to ₹8,434.84 cr in 2020-21. The Government has set an ambitious target to achieve exports of about ₹35,000 cr by 2025.
- According to the latest report of the SIPRI, three Indian companies figure among the top 100 defence companies in the 2020 rankings — HAL, the Ordnance Factory Board and BEL.
- To boost indigenous manufacturing, the Government had issued two “positive indigenisation lists” consisting of 209 items that cannot be imported and can only be procured from domestic industry.
According to the latest report of the Swedish think tank Stockholm International Peace Research Institute (SIPRI), three Indian companies figure among the top 100 defence companies in the 2020 rankings — Hindustan Aeronautics Limited (HAL), Ordnance Factory Board and Bharat Electronics Ltd (BEL). “Their aggregated arms sales of $6.5 billion were 1.7% higher in 2020 than in 2019 and accounted for 1.2% of the top 100 total,” the report, released earlier this month, said.
There was an overall drop in India’s arms imports between 2011-15 and 2016-20, according to another SIPRI report of 2020 and while India remained among the top importers, it was also included in the Top 25 defence exporters.
What are the big-ticket items that India can export?
Addressing the Indian Ocean Region Defence Ministers conclave at Aero India 2021, Defence Minister Rajnath Singh announced that India was ready to supply different types of missile systems, LCA/helicopters, multi-purpose light transport aircraft, warships and patrol vessels, artillery gun systems, tanks, radars, military vehicles, electronic warfare systems and other weapons systems to IOR nations.
In February, talking of the neighbourhood, Prime Minister Narendra Modi said the changing geopolitical reality was that many smaller nations were now worried about security and would look towards India as it had the strength of low-cost, high-quality production. “We are exporting to over 40 nations now. We now have to emerge as a global exporter,” he had stated.
Assistance in capacity building and capability enhancement has emerged as a major theme in discussions with Indian Ocean littoral states with the Navy taking the lead in this area. Vietnam is procuring 12 Fast Attack Craft under a $100 million credit line announced by India and discussions are continuing to identify systems under the second line of credit of $500 million. Vietnam is also interested in Advanced Light Helicopters and Akash surface-to-air missiles.
The Defence Research and Development Organisation, Hindustan Aeronautics Limited (HAL) and Bharat Electronics Limited have also lined up several platforms for export. HAL has pitched its helicopters and the Tejas LCA to several Southeast Asian and West Asian nations and is in the race to supply the LCA to Malaysia.
Discussions on the sale of BrahMos supersonic cruise missiles, jointly developed by India and Russia, are at an advanced stage with some Southeast Asian nations.
What are the steps taken by the Centre to boost defence production?
Measures announced to boost exports since 2014 include simplified defence industrial licensing, relaxation of export controls and grant of no-objection certificates. Specific incentives were introduced under the foreign trade policy and the Ministry of External Affairs has facilitated Lines of Credit for countries to import defence product. In addition, defence attaches in Indian missions abroad have been empowered to promote defence exports.
The Defence Ministry has also issued a draft Defence Production & Export Promotion Policy 2020.
On the domestic front, to boost indigenous manufacturing, the Government had issued two “positive indigenisation lists” consisting of 209 items that cannot be imported and can only be procured from domestic industry. In addition, a percentage of the capital outlay of the defence budget has been reserved for procurement from domestic industry. For the year 2021-22, about 63% of the capital outlay or about ₹70,221 crore will be done from domestic defence industry, the Defence Minister has said.
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