The Indian government is keen on giving a boost to defense exports and make India a $5 trillion economy by 2024. The Defence Minister has announced a massive target turnover of $26 billion by 2025 for indigenous defense aerospace and military production.
Crux of the Matter
Import-Export Balance In a recent report by Stockholm International Peace Research Institute (SIPRI), India is the second-largest importer of arms at 9% of the global imports from 2015-19, just lagging behind Saudi Arabia that accounted for 12%. India’s major supplier Russia’s share decreases from 76% to 56% over a decade, only to be filled in by the imports from the newest defense ally, US. Imports from Israel and France also increased by 175% and 715% respectively. The spike in imports from France can be attributed to the massive Rs. 59,000 crore Rafale deal. Despite the dependency on arms imports, India’s arms export score improved by 2 ranks. India stands at 23 among arms exporters. In recent, Myanmar, Sri Lanka, and Mauritius have been buying more arms from India.
Aiming High Exports The primary aim of indigenous defense production remains to first cater to the needs of Indian forces. Private sectors are being encouraged to invest and participate in defense manufacturing.
The manufacturing sector has the potential to reach $1 trillion by 2025 and the government is striving to achieve the goal by implementing key flagship programmes like Make in India. – Rajnath Singh, Defense Minister
This move will promote Research & Development and innovation to secure a place in global supply chains. To enhance interaction between all stakeholders, the government has initiated a number of structural reforms along with giving approval to more than 200 proposals worth Rs 4 lakh crore in defense manufacturing only in the last five years. The Defence Minister also put forward the government’s vision to double the size of the aeronautics industry from Rs 30,000 crore to Rs 60,000 crore by 2024 by promoting the public-private-partnership (PPP) model.
Defense public sector undertakings (PSUs) are now increasing their export portfolio to 25% of their turnover and the government is ready to provide Lines of Credit and grants to friendly foreign countries over the next five years. With the volume of investments increasing supported by major structural reforms and programs, the government is working to export defense goods and services of $5 billion in the next five years.
The government will also now act as an incubator, catalyst, and facilitator for promoting investment. It is also providing Transfer of Technology (ToT) in tie-up with DRDO at zero charges. Under which 900 agreements with private firms have already been made.
We understand that Defence R&D in the private sector will take time to establish itself. Thus, we have opened opportunities through DRDO with a zero fee for Transfer of Technology (ToT), free access to over 450 patents, access to test facilities and an upfront funding of up to Rs 10 crore. – Rajnath Singh, Defense Minister
The government has its roadmap prepared for manufacturing of mega defense platforms including fighter aircraft, helicopters, tanks and submarines and application of artificial intelligence in national security set up.
Curiopedia
Defence Production Policy of 2018 has set a goal of becoming among the top 5 global producers of the aerospace and defence manufacturing with an annual export target of US$5 billion by 2025. Despite having a modest internal defence industry, India is the largest arms importer in the world, with most of its high-tech, high-value equipment such as aircraft, ships, submarines, missiles, etc. coming in from Russia. India domestically produces only 45% to 50% of defence products it uses, and the rest are imported. India’s defence exports were Rs 4,682 crore (US$0.66 billion) in 2017–2018 and Rs 10,500 crores (US$1.47 billion) in 2018–2019, of 2018–2019 exports India’s 8 Defence Public Sector Undertakings (DPSU) and 41 Ordnance Factories (OF) contributed INR800 crore (7.6% of total defence exports). More Info
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