Sansad TV: India’s Defence Exports- Challenges & Opportunities | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Introduction

• In the financial year 2021-22, India's defence exports amounted to INR 13,000 crore. The government aims to increase the annual defence exports to $5 billion by 2024-25. Over a three-year period from 2016-17 to 2018-19, defence exports grew by a whopping 700%, from INR 1,521 crore to INR 10,745 crore.
• Between financial years 2014-15 and 2020-21, the value of exports of defence items, including major items, increased from INR 1,940.64 crore to INR 8,434.84 crore. India has set a target to achieve a manufacturing turnover of $25 billion or INR 1,75,000 crore, including exports of INR 35,000 crore in aerospace and defence goods and services by 2025.

The need for defence indigenization

• There are several reasons why India needs to focus on defence indigenization. Firstly, it will help the country become self-reliant. Secondly, it will reduce dependency on foreign players and ensure national security. Thirdly, it will help conserve or reduce the Balance of Payment deficit. 
• Fourthly, it will promote employment opportunities and exports. Lastly, it will reduce the cost of production in India, which in turn, will reduce the fiscal deficit. As per the Stockholm International Peace Research Institute (SIPRI), India became the third-largest defence spender in the world in 2019.

Measures being taken by the Government to promote defence exports:

• The Indian government is taking several steps to promote defence exports. These include simplifying defence industrial licensing, relaxing export controls, and forming a committee comprising the Defence Minister, External Affairs Minister, and National Security Advisor to fast-track export approvals.
• Additionally, the government is extending Line of Credit to foreign countries to import defence products and empowering Defence Attaches in Indian missions abroad to promote defence exports.
• However, there are several challenges that need to be addressed. Firstly, India lacks a robust defence manufacturing base and relies heavily on government ordnance factories, which have a poor track record of efficiency and financial performance. This has discouraged private participation in the sector, which is capital intensive and involves high risks. 
• Secondly, there is a lack of data to assess the degree of indigenisation achieved by defence production entities in the country. 
• Finally, there are bureaucratic delays and licensing issues, which make it difficult to do business in the defence industry. Despite these challenges, the government aims to achieve a manufacturing turnover of $25 billion, including exports of $5 billion, by 2024-25.

Conclusion

India has aimed to achieve defense exports worth USD 5 billion by 2024 and to attain this goal, there is a requirement to establish an atmosphere that promotes greater involvement of private industry, along with a stable macroeconomic and political environment and a transparent business environment that facilitates fair competition. A committee comprising the Defence Minister, External Affairs Minister, and National Security Advisor was constituted to accelerate the approvals for the export of significant defense platforms. The committee would sanction subsequent exports of major indigenous platforms to different countries and examine various alternatives, including the government-to-government route.