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From Importer to Exporter- India Rises As A Defence Exporter Under Modi-Government

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The year 2020 marks a five-fold increase over the value of export approvals secured by the Ministry of Defence according to the latest figures published by the MoDs Department of Defence Production (DDP) on April 14.

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The data researched by the EurAsian Times shows that India registered record-high defense export approvals worth USD1.1 billion in fiscal year (FY) 2019–20, which concluded at the end of March. The online dashboard shows that the value of defense export approvals in FY 2019–20 was INR 8620.59 crore, a yearly increase of 4%, compared with the INR 8320.09 crore recorded in FY 2018–19, which represented a 78% increase over the INR 4682.36 crore in approvals registered in FY 2017–18.

CHART-INDIA

 

From being one of the biggest net importers of defense hardware, India is well on its way to becoming an exporter of the same. The latest data by the Ministry also shows that India’s private sector has recorded a majority of defense export approvals.

In FY 2019–20, the private sector was attributed with 93% of defense export approvals in terms of value, an increase of 4%, with the remainder secured by state-owned defense public sector undertakings (DPSUs).

Compared to last year according to data compiled by the EurAsian Times, the private sector secured 89% of all export approvals. In FY 2017–18 and FY 2016–17 the private sector was attributed with 68% and 13% respectively. Export by DPSUs/Ordnance Factory Board (OFB) has come down from Rs 1327.51crores in FY 2016-17 to just Rs 403.94 crores in fiscal 2019-20.

India’s emergence as a defense exporter can be linked to the ‘Make in India’ initiative by Indian PM Narendra Modi. The provision of ‘Make’ category of capital acquisition in DPP is a vital pillar for realizing the vision behind the ‘Make in India’ initiative of the Government, by fostering indigenous capabilities through design & development of required defense equipment/product/systems or upgrades/sub-systems/components /parts by both public and private sector industry/organization in a faster time frame.

There are two subcategories in this project: Make-I (Government Funded) and Make II. The latter will involve prototype development of equipment/ system/ platform or their upgrades or their subsystems/ sub-assembly/assemblies/components, primarily for import substitution/innovative solutions, no Government funding will be given for prototype development purpose, while the former will involve Government funding of 90%, released in a phased manner and based on the progress of the scheme, as per terms agreed between the MoD and the vendor.

In the last two years, the Mod government has taken positive steps and decisions that have contributed to India achieving its current position.

These include liberalizing industrial licensing for Indian manufacturers, revision of FDI policy that allows foreign investment under automatic route up to 49% and above 49% through government route thus allowing access to modern technology.

This also includes the revision of DPP to promote indigenous design and development of defense equipment, launching of Innovations for Defence Excellence (iDEX) framework to become self-reliant and to foster innovation and technology development in Defence and Aerospace Sector by engaging Industries including MSMEs, startups, individual innovators, R&D institutes and academia.

The establishment of defense corridors to serve as engines of economic development and growth of defense industrial base in India and setting up testing facilities available to the private sector with the aim to assist them in the design and development of defense systems.

As the EurAsian Times reported earlier, the Defence Investor Cell was also developed in the ministry to provide all necessary information including answering queries related to investment opportunities, procedures and regulatory requirements for investment in the sector.

The process for export clearance was also moved to an online platform and made transparent and streamlined. Offset guidelines have been made flexible by allowing change of Indian Offset Partners (IOPs) and offset components, even in signed contracts.

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The government has signed Agreements on Defence Cooperation with Argentina, Russia, Serbia, Myanmar, Indonesia, Comoros, Jordan, Madagascar, Uganda, Zambia, Saudi Arabia, and Finland.

The major defense items being exported are Personal Protective items, Offshore Patrol Vessels, ALH Helicopter, SU Avionics, Bharati Radio, Coastal Surveillance Systems, Kavach MoD II Launcher, and FCS, Spares for Radar, Electronic System and Light Engineering Mechanical Parts, etc.

The major export countries include Italy, Maldives, Sri Lanka, France, Nepal, Mauritius, Sri Lanka, Israel, Egypt, the UAE, Bhutan, Ethiopia, Philippines, Poland, Spain, and Chile.

Compiled By: Armaan Srivastava, New Delhi

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