Siddharth Roy
(siddharth01.roy@gmail.com)
India is a country that shares its borders with two nuclear countries, i.e., China and Pakistan. Post-independence, India fought five wars with these two nations. Although we won the four wars we fought with Pakistan, the 1962 war with China came with a disappointing result for us. There were many reasons why we lost the war, but the primary reason was the untimely delivery of military support by the USA. Countries that are dependent on other countries for their military and defence supplies are always at the mercy of the nation providing the support.
In the fiscal year 2022-2023, India’s defence exports increased manifolds to a record Rs 15,920 crore. This is a remarkable achievement for India, as the export numbers are around Rs 3000 crore higher than the previous fiscal year and around ten times more than the numbers of 2016–17. The private sector played a crucial role in increasing India’s export numbers. In a recent official statement, the Defence Ministry said that India’s defence sector is presently exporting weapons to more than 85 countries. India’s increasing exports and around 114 countries participation in this year’s Aero India show India’s growing defence manufacturing capabilities. And in this Aero India 2023 event, our Prime Minister Narendra Modi said that India is working towards achieving a target of around $5 billion in exports. To achieve this target, the current government has hiked defence spending by 13% in the latest union budget. The capital outlay for defence modernization and infrastructure development has also been increased to Rs 1.62 lakh crore, which is around 57% more than that of 2019–20. From these data, it is evident that India is trying to bolster its defence capabilities so that during times of crisis, India doesn’t have to be dependent on countries like the USA and Russia for defence equipment. Moreover, India wants to change its image from being the number one arms importer to being one of the top 10 largest arms exporters.
After India’s independence, India was very dependent on Britain as well as the USA and France for its defence requirements. Later on, the USSR came into the picture, and thus, in 1954, India purchased Mi-4 helicopters and AN-12 supply-dropping aircraft from the USSR. Since the 1970s, India’s relationship with the USSR, especially on strategic grounds, has been immense, and India has always been quite reliant on Russia for its defence needs. According to the Stockholm International Peace Research Institute (SIPRI) report, India imports more than half of its defence equipment from Russia. But India in recent times has been trying to lessen its dependence on Russia, which is evident from the fact that India’s imports from Russia have decreased from 70% in 2011–15 to 49% in 2016–20. India’s dependency on Russia has declined over the years due to a focus on the indigenousization of defence production. This policy of indigenization of defence production has positively affected India’s economy as the import bill and the fiscal deficit decreased manifolds. India is moving towards becoming a defence manufacturing hub, and the policy of Make in India has helped push towards achieving this feat. The Government of India is also setting up defence industrial corridors where public sector companies, private sector companies, and MSMEs will work together to bolster India’s domestic defence manufacturing. The FDI limit in the defence sector was also increased to 74% under the automatic route in 2020, and due to this, private players in defence manufacturing are getting attracted to India, leading to the entry of sophisticated technologies into our country. The defence manufacturing ecosystem has enabled enhanced defence exports from the country as well as modernization of the equipment. Between the years 2013 and 2018, India was one of the top importers of defence equipment, accounting for around 12% of the total global imports. But soon after that, due to major policy decisions, this has come down, and India is targeting around Rs 35,000 crore of defence exports by 2025.
Over the years, India has taken various major policy decisions towards bolstering the Make in India initiative regarding defence manufacturing. The most important of all was the introduction of the Defence Acquisition Procedure (DAP), which was earlier known as the Defence Procurement Procedure (DPP). DPP was introduced in 2002 to streamline the procurement of military hardware for the Armed Forces. The DPP focuses on research and development. Another policy under the DPP that has boosted domestic defence manufacturing and its technological advancement is BUY (Global Manufacturing in India). Under this initiative, defence equipment is purchased from foreign vendors, and using technology transfer, it is eventually manufactured in India. Subsidiary units and production agencies play a key role in doing so.
India’s defence exports have reached almost Rs 16000 crore. India aims to provide defence equipment to African countries as well. India has also signed around 85 defence deals. According to a SIPRI report, out of the total defence exports from India during 2017–21, 50% were exported to Myanmar, 25% to Sri Lanka, and 11% to Armenia. Currently, India exports various defence equipment, including BrahMos and Tejas, to other countries. Recently, a deal was also signed between TATA Group and USA-based Lockheed Martin regarding the manufacturing of fighter wing ship sets, which will be delivered by 2025. Even the USA’s Apache helicopter body parts will be manufactured in India only. Similarly, Adani Defence and Lohia Group are manufacturing parts for Israeli drones in India itself. The Ministry of External Affairs has also provided lines of credit to facilitate arms exports.
The USA dominates the world of high-end defence products, and India is trying to dominate the value arms market or the affordable defence market. Russia has always been the leader of the value arms market, but due to the Russia-Ukraine war, Russia’s position is compromised. India needs to take this opportunity to become the leader in this market. For doing so, India will have to increase its capital expenditure on defence, allow higher subsidies in research and development, and also provide necessary tax exemptions to bolster domestic manufacturing. With the way India is progressing towards atmanirbharta in defence manufacturing, there is no doubt that in the coming future, India will become a global leader in defence exports.