The Prime Minister recently announced plans to increase annual defence exports to $5 billion over the following two years, as arms companies flocked to a significant air show in an effort to cut into the nation’s massive import budget.
GS Paper-3: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth
Defense Industrial Corridors will encourage domestic production of equipment for the military and aerospace industries. This can reduce our imports and promote the export of items to other countries. Comment (150 words)
- Aero India, a five-day event held every two years, is expected to see India sign $9 billion worth of defence contracts. The largest deal India has ever made will be this one. This occurs as its airlines work to complete their purchases of jetliners to meet domestic demand and pressure foreign aircraft manufacturers to increase local production of aircraft, primarily through partnerships.
- Despite being one of the largest consumers of defence equipment in the world for many years, India has consistently underperformed in the international market for the export of weapons.
- India’s export targets reflect the country’s growing influence, as it uses significant imports to promote investment in its domestic industry.
India’s Defense Exports
- In the past, India has exported supersonic cruise missiles from the Russia-India joint venture BrahMos Aerospace to the Philippines as well as Dhruv helicopters from Hindustan Aeronautics (HAL) to the Philippines, Mauritius, and Ecuador.
- Other items exported by India include offshore patrol vessels, coastal surveillance systems, avionics, chaff rocket launchers, and radar spares. o HAL has also offered to sell Malaysia its Tejas light fighter jet.
- The air show aims to promote the export of domestic air platforms like the Tejas, Dhruv, HTT-40 training aircraft, Dornier light utility helicopter, and the light combat helicopter.
- India also wants start-ups and smaller domestic firms to produce parts for significant defence goods around the world as well as to attract foreign investment for joint product development and production.
Do you know?
- In 2021–2022, India exported defense-related goods and technology worth a record Rs 13,000 crores; in 2022–2033, this amount is predicted to reach Rs 17,000 crores.
- The Ministry of Defence has released positive indigenization lists for over 3,700 items, including 310 other defense-related items and components/line replacement units for defence public sector units.
- India’s defence exports increased from 1,520 crore to 8,435 crore between 2017 and 2021, according to data from the defence ministry, nearly quadrupling.
- It’s predicted that by 2023, defence exports will surpass $19,000 billion, and by 2025, India may reach its goal of exporting goods worth $25,000 billion.
Pressure to Diversify
- At the Aero India exhibition, officials praised the aerobatic feats of Tejas and Russian-made Sukhoi 30 fighter jets.
- India’s largely Soviet-era air force fleet, which shares borders with nuclear-armed rivals China and Pakistan, is in desperate need of modernization.
- Over the past five years, Russia has given India roughly $13 billion worth of weapons, and suppliers in the European Union and the United States have been competing for a larger share of the market.
- As a result of Russia’s invasion of Ukraine, India must now further diversify its supply chain due to concerns over a potential Russian supply disruption and Western pressure on the country to cut its ties with Moscow.
- Indian airlines are also growing, and Tata Group’s Air India is expected to announce a record-breaking deal to purchase nearly 500 aircraft from Airbus and Boeing, with a list price of more than $100 billion.
- Although it is unlikely that the transaction will be revealed at the air show, it will be announced at India’s largest industry gathering, where suppliers will be vying for spin-off contracts from the country’s expanding civil and military aviation sectors.
- The Prime minister mentioned that India is not just a market for defence companies; it is also a potential defence partner. He also urged the private sector in India to continually increase its investments in the nation’s defence industry.
- The government is promoting an ambitious plan to make the country a centre for defence manufacturing. To encourage domestic producers, the nation has prohibited the importation of more than 300 defence systems and related components. It will take a while, but it is entirely doable, to go from having a 0.2 percent share of the world’s arms export market to being a significant exporter.