News Highlights
India’s Defence exports of arms and technologies touched a record Rs 13,000 crore in the financial year 2021-22, with 70% contribution coming from the private sector and the remaining 30% from the public sector
Focus Points
- “The private sector accounted for 70% of the exports while public sector firms accounted for the rest
- Earlier the private sector used to account for 90% and now the share of Defence Public Sector Undertakings (DPSUs) has gone up
- The exports in 2021-22 were almost eight times of what they were about five years back
- The export were mainly to the US, the Philippines and other countries in South-East Asia, West Asia and Africa
- In January 2022, India signed a $374.96-million deal with the Philippines, its single biggest defence export order, for the supply of three batteries of shore-based anti-ship variants of the BrahMos supersonic cruise missile.
- India has imposed a phased import ban on 310 different weapons and systems during the last two years.
- These weapons and platforms will be indigenised in phases over the next five to six years.
- India has set a target of clocking defence exports worth $5 billion by 2024.
India’s Defence Exports
- India’s defence exports have increased from ₹1,521 crore in 2016-17 to ₹8,434.84 crore in 2020-21.
- 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.
- There was an overall drop in India’s arms imports between 2011-15 and 2016-20.
- But according to the SIPRI report of 2020 India remained among the top importers, it was also included in the Top 25 defence exporters.
Government Initiatives to boost defence production
- Budget 2022-23: It has set aside nearly 70% of the capital allocation for the domestic industry.
- 25% of the defence R&D budget has been earmarked for the private sector, including the industry, start-ups and academia.
- The Government of India changed the automatic route limit for FDI in the defence sector to 74%
- This will boost national security, self-sufficiency in product design, increase investments, income and employment.
- The Government of India opened the defence industry for private sector participation to provide impetus to indigenous manufacturing
- The government has established two Defence Industrial Corridors (DICs) in the country
- Uttar Pradesh Defence Industrial Corridor (UPDIC)
- Tamil Nadu Defence Industrial Corridor (TNDIC)
- Under the ‘Make in India’ scheme, Centre has notified three lists of projects
- Make I (90% government funded, with vendors)
- Make II (prototype development of equipment/system/ platform or their upgrades with no government funding)
- Make III (collaboration with foreign equipment manufacturer for production in India).
- Government formulated the ‘Defence Production and Export Promotion Policy 2020’ to provide impetus to self-reliance in defence manufacturing under the ‘Aatmanirbhar Bharat’ scheme
- Series of measures such as simplified defence industrial licensing, relaxation of export controls and grant of No Objection Certificates (NOC) etc.
Challenges faced by the Sector
- The budgetary allocation often remains unspent due to delay in disbursal
- Lack of infrastructure for increasing production and logistic support deficit.
- Lack of strategic planning for future needs of the Armed Forces
- The absence of a dispute settlement body to resolve issues hinders the process.
- Poor design capability in critical technologies, inadequate investment in R&D and inability to manufacture major subsystems and components hamper the indigenous manufacturing.
Pic Courtesy: Economic Times
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