India’s $5 billion Defence Exports Target

In News

• Recently, the Ministry of Defence has decided to raise India’s annual defence exports  target to $5 billion by 2024-25.

About

• The Indian defence exports have increased by 334% in the last five years, according to a Stockholm International Peace Research Institute (SIPRI) report released in 2022.
  • India is among the top 25 exporters  providing defence equipment to over 75 countries
• India’s defence export value till December 2022 had reached Rs 6,058 crore.

What does India Export?

• India exports big defence platforms like indigenous LCA Tejas,Advanced Light Helicopter and  fast patrol vessels.
• It  also exports missile systems like BrahMos supersonic cruise missile and Pinaka multi-barrel rocket launchers.
• Apart from these india exports defence items like Personal Protective items,, SU Avionics, Bharati Radio, Coastal Surveillance Systems, Kavach MoD II Launcher and FCS, Spares for Radar, Electronic System and Light Engineering Mechanical Parts, among others.

Major Export Destinations

• A report released by India Exim Bank stated that Mauritius(6.6), Mozambique (5) and Seychelles(2.3) have been among the top customers for India’s defence exports between 2017 and 2021.
• Coming to Ammunition,Myanmar has been the biggest importer of Indian arms at 50 per cent during the 2017-2021 period, followed by Sri Lanka at 25 per cent and Armenia at 11 per cent.

Government Initiatives

• Strong government push towards achieving self-reliance in defence, has resulted in an  increase India’s defence exports as well.some initiatives for indigenisation are
  • earmarking 75 per cent of 2023-24 defence capital budget towards procurements from domestic sources.
  • three positive indigenisation lists of 3,738 items, which places an embargo on import of items mentioned in lists .
  • Establishment of two defence industrial corridors in Uttar Pradesh and Tamil Nadu and  simplification of processes aimed at boosting defence exports.
• Licensing relaxation: Measures like simplified defence industrial licensing, relaxation of export controls and grant of no-objection certificates has improved ease of doing buisness.
• Lines of Credit: Specific incentives were introduced under the foreign trade policy to encourage defence exports and the Ministry of External Affairs has facilitated Lines of Credit for countries to import India’s defence products.

 Issues

• Policy delays: In the past few years, the government has approved over 200 defence acquisitions worth Rs 4 trillion, but most are still in relatively early stages of Development.
• Lack of Critical Technologies: Poor design capability in critical technologies, inadequate investment in R&D and the inability to manufacture major subsystems and components hamper the indigenous manufacturing.
• Long gestation: The creation of a manufacturing base is capital and technology-intensive and has a long gestation period. By that time newer technologies make products outdated.
• Multiple jurisdictions: Overlapping jurisdiction of the Ministry of Defence and Ministry of Industrial Promotion impair India’s capability of defence manufacturing.
• Lack of quality: The higher indigenization in few cases is largely attributed to the low-end technology.
• FDI Policy: The earlier FDI limit of 49% was not enough to enthuse global manufacturing houses to set up bases in India.

Way Forward

• The growth of the defence industry helps India not only in the strategic sphere but economically too by reducing imports and creating jobs. 

Source: TH