Defence Industry

Taking India’s defence exports to $5 billion

If the annual SIPRI data consistently showing India among the top few arms importing nations in the world is a depressing commentary on the state of India’s military-industrial capability and capacity, the 2020 figures bring some cheer.

Although India is second only to Saudi Arabia in terms of imports, her defence exports for the previous year cracked the global top 25. From struggling to acquire specialised weapon locating radars (WLRs) from the USA and Israel in the 1990s, India is now exporting them to Armenia in a deal worth some $40 million.

The Indian Defence Ministry’s own figures show that India managed to double the value of exports between FY2018 and FY2019, from Rs 4,682 crore to Rs 10,745 crore. At the Defexpo trade show in February 2020, PM Narendra Modi called for an export target of Rs 35,000 crore ($5 billion) annually within five years.

While the trajectory has been impressive thus far, to maintain this momentum and meet the $5 billion target will take some doing. Among the measures already adopted are a mandate for state-owned public sector units to earn 25 per cent of annual revenue through exports by FY2023, and for Indian diplomatic missions abroad to actively promote defence exports, including supporting lines of credit.

Nevertheless, the arithmetic remains difficult. India’s defence capital expenditure is presently split in an approximately 40:60 ratio between imports and domestic production, which means domestic capacity is worth a little over $8 billion. A $5 billion target for exports is therefore over half of the entire domestic capital spend of the defence budget.

Furthermore, the bulk of India’s domestic capacity rests with defence PSUs, which have hardly distinguished themselves on the export front. More often than not, they simply have little to offer to the world. Organisations like the Ordnance Factories have sat on artillery drawings for decades, manufacturing neither for domestic nor export consumption.

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