The Rs 40,000-crore defence challenge

Boosting defence exports requires a major emphasis change. Instead of focusing on low-value consumables such as ammunition, India needs to concentrate on high-value, complex combat platforms

Prime Minister (PM) Narendra Modi on Wednesday threw a challenge before the Indian aerospace and defence industry with his call to achieve an annual export target of Rs 40,000 crore. Neither is this resolve new, nor the figure. The aim of increasing defence exports more than 10-fold from the existing level of Rs 2,000-3,000 crore annually to over $5 billion (then Rs 35,000 crore), was first enunciated in the Defence Production Policy of 2018 (DPrP-2018). Mr Modi again made that call while addressing DefExpo 2020 in Lucknow. Helped by adding the export of civil aerospace products to that of defence kits, exports reached a high of Rs 13,000 crore this year. Even so, a three-fold increase is required for meeting the DPrP-2018 export target, which is a substantial challenge.

Yet, it is not inconceivable. As the PM pointed out, defence exports have grown eight-fold in the past five years, with defence materials and equipment flowing to more than 75 countries. And the government has put its shoulder to the wheel, having apparently understood that multiplying defence exports is essential for meeting the DPrP-2018 target of taking India into the league of the world’s top five defence producers, with an annual turnover of $26 billion (Rs 1.8 trillion) — a two-fold increase over the current annual defence production of Rs 90,000 crore.

Apparently aware of the magnitude of the challenge, the government has created a policy framework for boosting aerospace and defence exports. Defence attachés posted at Indian embassies abroad have been tasked with seeking opportunities to supply their host countries with Indian military equipment. New Delhi has created a liberalised trade environment for defence exports by eliminating structural obstacles to trade in arms. India has already obtained entry into three of the four global export control regimes: The Missile Technology Control Regime, the Wassenaar Arrangement, and the Australia Group. New Delhi has mustered all its diplomatic heft into obtaining entry into the fourth — the Nuclear Suppliers Group. It has offered some neighbouring countries like Myanmar, the Maldives, and Sri Lanka credit lines to purchase Indian defence equipment. Defence public sector undertakings (DPSUs) are now required to have 25 per cent of their turnover in exports. A nodal agency, the Indigenous Defence Equipment Exporters Association, was set up in October for processing defence export inquiries from prospective customers across the globe.

Even with these reinforcements to the structural framework, boosting defence exports exponentially requires a major change in emphasis. Instead of focusing on the export of low-value consumables such as ammunition, spare parts and aerospace components, India needs to concentrate on high-value, complex combat platforms. As the Indian military abandons its reluctance to take into its inventory indigenous platforms like the Tejas Mark 1 and Mark 1A fighters, the light combat helicopters (LCH), Dhruv and Rudra helicopters, the Arjun tank, Akash air defence systems, Pinaka rocket launchers, and a range of indigenous warships, including corvettes, frigates and destroyers, potential customers legitimately ask why India’s military shrinks from buying these platforms. India’s military must lead the way by ensuring that the army, navy and air force induct indigenous weaponry into operational service, and co-opt industry to incrementally develop and improve the products. The export of this weaponry creates economies of scale, brings down equipment prices for India as well as for buyer countries, and also generates strategic heft for India.