Simplified norms pushing India's defence exports to new peaks
Simplification of procedures for defence exports has resulted in export of Rs. 8,620.6 crore in 2019-20, which is nearly six times the figure achieved in 2016-17. Exports registered a phenomenal Compounded Annual Growth Rate (CAGR) of 78.3% for an all-time high of around Rs. 16,000 crore in FY 2022-23, which is a ten-fold jump since 2016-17. A good augury is that Indian industry has shown its capability of design and development with 100 firms into export of defence products to over 85 countries. Indeed, the sector has come of age as India was known as an importer till about eight years back. Today, it exports major platforms like Dornier-228, 155 mm Advanced Towed Artillery Guns (ATAGs), Brahmos Missiles, Akash Missile System, radars, simulators, mine protected vehicles, armoured vehicles, PINAKA rockets and launchers, ammunition, thermal imagers, body armours, line replaceable units and parts & components of avionics and small arms. There is a growing global demand of LCA-Tejas, light combat helicopters, aircraft carriers and MRO activities.
To give a push to defence exports, the government has taken a number of policy initiatives by way of reforms over the last five to six years. Export procedures have been made industry-friendly with end-to-end online export authorisation curtailing delays and bringing ease of doing business. The government has notified three OGELs, specifically for export of parts and components, transfer of technology, major platforms and equipment. OGEL is a one-time export license, which permits export of specified items to specified destinations, enumerated in the OGEL, without the need for any export authorisation. The five largest suppliers of arms during 2016–20, including the USA, Russia, France, Germany and China, accounted for 76 per cent of all arms exports, with France boasting of the highest increase. While those of the US and German also grew, arms exports of Russia and China decreased. The top 25 arms exporters accounted for 99 per cent of global exports in 2016–20) and North American countries and Europe accounting for 86 per cent.
As per March 2o020 data of the Stockholm International Peace Research Institute (SIPRI), India stood 19th in the list of major arms exporters for 2019. While it has made significant progress over the last five years, its share of global arms exports is a meagre 0.17% which indicates the quantum of existing opportunity in defence exports. Towards tapping this, the MoD has targeted to achieve exports of Rs. 35,000 crore till 2024 indicating that exports will have to grow at a CAGR of 40% till 2024. Targets have been set for defence public sector undertakings (DPSUs) and OFB for export of defence-related products. Even state-owned public sector units have been mandated to earn 25% of annual revenue through exports by FY2023. The order book of HAL is currently full, with Rs. 84,000 crore worth of deals. Another Rs. 50,000 crore is apparently in the pipeline.
