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India ‘largest arms importer’ in 2018-2022, but defence exports hit ‘all-time high’ of Rs 13,399 cr in 2022-23

India now exports to 'more than 80 countries'. Narendra Modi govt had in 2020 set target of Rs 35,000 cr export in aerospace and defence goods & services for next 5 years.

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New Delhi: Earlier this month, the Union Defence Ministry announced that India’s defence exports have reached an all-time high of Rs 13,399 crore in the ongoing 2022-2023 financial year, stating that the nation now exports to more than 80 countries worldwide.

The list of countries included Italy, Sri Lanka, Russia, Maldives, Mauritius, Nepal, France, Sri Lanka, Egypt, Israel, Bhutan, UAE, Saudi Arabia, Ethiopia, Philippines, Poland, Spain and Chile.

The increase in defence exports has been about seven times what it was eight years ago in 2015-16 at Rs 2059.18 crore, according to official data.

However, the latest report of the Sweden-based Stockholm International Peace Research Institute (SIPRI), which tracks defence spending trends, noted that India was the world’s largest arms importer between 2018 and 2022, accounting for 11 per cent of global imports.

This despite the fact that the Narendra Modi government has really pushed for indigenisation, with heavy curtailment of defence imports.

Sources in the defence establishment explained that India is in the initial stages of creating a defence ecosystem and the import numbers will come down over the next five-seven years as it is the government’s priority to encourage indigenisation.

On exports, the sources said that close to 70 per cent were being made by India’s private sector, with the public sector now coming up and negotiating big-ticket deals for Brahmos to fighter jets and helicopters.

During 2016-2020, India accounted for 0.2 per cent of the share of global arms exports, making it the 24th largest exporter of major arms in the world, according to a report in Hindustan Times. This represented an increase of 228 per cent over India’s export share of 0.1 per cent during the previous five-year period of 2011-15.

When it comes to the top 100 arms-producing firms, only two Indian companies — the state-run Hindustan Aeronautics (HAL) and Bharat Electronics (BEL) — figure in a list released by SIPRI last year. HAL ranked 42nd in the SIPRI report, with arms sales of $3.3 billion, and BEL ranked 63rd with sales of $1.8 billion. However, the majority of their sales came from domestic purchases by India’s defence forces, according to the report.

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Ambitious target, major exports

The Narendra Modi government had in 2020 set an ambitious target of Rs 35,000 crore ($5 billion) export in aerospace, and defence goods and services for the next five years. This was part of the Rs 1.75 lakh crore ($25 billion) turnover in defence manufacturing that the government is aiming to achieve by 2025.

While India exports several defence items to about 80 countries, according to government data, the majority of that is in the aerospace sector, where Indian firms have been manufacturing several parts, including fuselage and critical components, for foreign companies, besides the Dhruv Advanced Light Helicopters exported to Mauritius.

For example, earlier this month, US-based defence and aerospace giant Lockheed Martin and Tata Group signed an agreement to commence production of fighter wing shipsets at their joint venture in Hyderabad. The order involves 29 fighter wing shipsets, with the option of producing additional shipsets, with deliveries starting in 2025. The wings are intended for the F-16 Block 70/72 jets and would be delivered to a US facility in Greenville, South Carolina, for inclusion into the assembly line.

Besides that, all fuselages of the American attack helicopter Apache sold across the world are now made in India, in a joint venture between Boeing and Tata, and so are the fuselages of the S-92 Sikorsky chopper.

Similarly, companies like Adani Defence and Lohia Group are manufacturing fuselages for several Israeli drones.

Indian companies are also making and exporting components for systems that are assembled by foreign companies elsewhere, but sourced from India.

According to government data, the major defence equipment exported in the past five years includes weapon simulator, tear-gas launcher, torpedo-loading mechanism, alarm monitoring & control, night vision monocular and binocular, light-weight torpedo & fire control systems, armoured protection vehicle, weapons locating radar, HF Radio, coastal surveillance radar, among others.

Export of other major defence items like BrahMoS missiles to the Philippines, to mounted artillery systems to Armenia, is not mentioned because the actual delivery is yet to start.

SIPRI data on international arms transfer trends also highlights that about 50 per cent of India’s defence exports from 2017 to 2021 were to Myanmar, followed by Sri Lanka (25 per cent), and Armenia (11 per cent).

The exports to Myanmar include 122mm barrels, boosters, detonating caps, igniters and electronic detonators, besides day and night optical sights for assault rifles.

Sources in the defence establishment told ThePrint that exports to Sri Lanka included almost the same items, along with certain kinds of ammunition.

Exports to Armenia included, besides mounted artillery, Pinaka multi-barrel rocket launchers, Konkurs anti-tank guided missile and a wide variety of ammunition.

Measures taken to push exports

The government has taken a number of steps to push defence exports, according to the sources.

The big change that has helped in exports, especially that of munitions, is that the Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) Category 6 titled ‘Munitions List’ that was “Reserved” has been populated.

This means that the director general of foreign trade delegated its authority and notified the department of defence production (DDP) as the licensing authority for export of items in Category 6 of SCOMET.

The export of items specified in the list, except for certain restricted items, is now governed by the standard operating procedure issued by the DDP.

Another measure to push exports has been the setting up of an end-to-end online portal for receiving and processing export authorisation permits, through which the applications submitted are digitally signed and authorisation also issued digitally, at a faster pace.

For repeat orders of the same product to the same entity, the consultation process has been done away with and permission is issued immediately. For repeat order of the same product to different entities, the consultation done earlier with all stakeholders is now limited only to the Ministry of External Affairs, according to the defence ministry.

In intra-company business, the earlier requirement of getting an end-user certificate (EUC) from the government of an importing country has been done away with, and the ‘buying’ company is authorised to issue the EUC. This is especially relevant for outsourcing of work by a defence-related parent company abroad to its subsidiary in India.

Also, a separate cell has been set up in the DDP to coordinate and follow up on export-related action, including enquiries received from various countries, sharing leads with private sector and public sector companies, and to facilitate exports.

(Edited by Nida Fatima Siddiqui)

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