Export Policies on Indigenous Weapons
”GS 3: Achievements of Indians in Science & Technology, Defence Technology, Indigenization of Technology”
- Today India is transforming from being the world’s largest arms importer to now exploring its great exporting potentials after several landmark steps to promote ease of doing business.
- A country that depends on imports for its defence equipment can never be strong. Therefore, being self-sufficient in the defence sector is very important and it is linked to the ‘self-respect’ and ‘sovereignty’ of our country. This has long been the sentiment of corridors of the Indian Ministry of Defence (MoD).
What is the target to achieve?
- Government’s ambitious vision of achieving a turnover of INR 175,000 Crore (~USD 24.5 Bn) including exports of INR 35,000 Crore (~USD 4.9 Bn) in A&D goods and services by 2025.
- Major steps in that direction were taken during the policy changes which were announced in the last 18 months including an increase in foreign direct investment limit to 74 per cent under the automatic route, a list of reserved items to be sourced from India only and other important changes in the Defence Acquisition Procedure (DAP) 2020.
Union Budget 2022-23 and Defence Exports
- The union budget aptly focused on promoting exports, promoting India as a manufacturing hub in clean-tech manufacturing, and self-reliance in select sectors.
- The promotion of exports has been a major area of focus for this budget and the initiative to replace the existing Special Economic Zone (SEZ) policy with a new regulation would provide the much-needed push for the SEZs in the country.
- The defence manufacturing sector is a large beneficiary of this year’s budget with 68% of the capital procurement budget being earmarked for the domestic industry in 2022–23 (up from 58% last year), which should bolster investments in domestic manufacturing in this key sector.
Which steps have been taken up to boost Defence exports in recent times?
- A completely end-to-end online portal for receiving and processing export authorisation permission has been developed. The applications submitted on this portal are digitally signed and the authorisation are also issued digitally, at faster pace.
- Scheme for Promotion of Defence Exports has been notified to provide an opportunity to the prospective exporters an option to get their product certified by the Govt. and provides access to the testing infrastructure of the Ministry of Defence for initial validation of the product and its subsequent field trials. The certificate can be produced by the prospective exporter for marketing their products suitably in the global market.
- To enhance functional autonomy, efficiency and unleash new growth potential and innovation in Ordnance Factories, the Government has converted 41 Ordnance Factories into seven Defence Public Sector Units (DPSUs), 100% Government owned corporate entity (ies).
- A Scheme to provide financial support to Defence Attaches for taking up actions for promoting exports of India made defence products both of public and private sector in the countries to which they are attached has been notified.
- Powers have been delegated to DRDO and CMDs of DPSUs for exploring export opportunities and participation in global tenders.
- Now with the corporatisation and functional autonomy gained by the new DPSUs, they are required to develop their own markets including the international market through diversification of their product portfolio and participation in exhibitions and export promotion activities. New DPSUs are required to achieve export targets.
- The CMDs of DPSUs are also allowed to explore export opportunities and participate in global tender under the delegated powers. They are allowed to open their marketing offices abroad. They have started customisation of their product as per user requirements and getting engaged with foreign OEMs and channel partners in foreign countries to boost their exports.
What is the draft Defence Production and Export Promotion Policy 2020?
- In order to provide impetus to self-reliance in defence manufacturing, multiple announcements were made under the ‘Atmanirbhar Bharat Package’.
- In implementing such a framework and to position India amongst the leading countries of the world in defence and aerospace sectors, the Ministry of Defence (MoD) has formulated a draft Defence Production and Export Promotion Policy 2020 (DPEPP 2020).
- The DPEPP 2020 is envisaged as an overarching guiding document of MoD to provide a focused, structured and significant thrust to defence production capabilities of the country for self-reliance and exports.
- The policy has laid out the following goals and objectives:
- To achieve a turnover of Rs 1,75,000 Crores (US$ 25Bn) including export of Rs 35,000 Crore (US$ 5 Billion) in Aerospace and Defence goods and services by 2025.
- To develop a dynamic, robust and competitive Defence industry, including Aerospace and Naval Shipbuilding industry to cater to the needs of Armed forces with quality products.
- To reduce dependence on imports and take forward “Make in India” initiatives through domestic design and development.
- To promote export of defence products and become part of the global defence value chains.
- To create an environment that encourages R&D, rewards innovation, creates Indian IP ownership and promotes a robust and self-reliant defence industry.
What Should be done?
- While the government has taken a number of constructive measures to actualise its dream of an ‘Aatma-nirbhar Bharat’, a lot still needs to be done before we can claim the coveted title of a defence manufacturer.
- In order for an industry to flourish, it is pertinent to strengthen and develop private industry while ensuring that public and national security interests are not compromised.
- When it comes to defence manufacturing, the Government’s reliance on Public Sector Undertakings (PSUs) to be the flagbearer of capabilities in the sector needs to be realigned.
- The capabilities of the Public and Private sector need to be integrated, developing this into a strategic partnership for achieving self-reliance in defence production.