India’s transition to becoming an Export Powerhouse in the Defence Sector

By R Anil Kumar

• Prime Minister Narendra Modi’s government has given a big push for not only making India Self-Reliant in Defence, but also bringing in a transition of making India an Export Powerhouse in the Defence Sector

• To promote self-reliance, the Defence Ministry has initiated the issuance of multiple ‘import embargo’ or negative arms import lists. As of May last year, the Modi government had announced a list of 928 military items that will come under a phased import ban between December 2023 and December 2029

• India’s defence exports have touched a record Rs. 20,800 Crores (approximately US$ 2.6 billion) in the financial year 2023-24

Bengaluru, June 30. India, which has long had the distinction of being the largest global arms importer, the narrative of arms exports is a paradigm shift.

In less than a decade, India not only indigenised the manufacturing of a large number of defence items but also turned into an arms exporter.

To achieve this goal, a series of bold decisions and policy reforms have been set in motion. Upon assuming power, the government embarked on a transformative path, emphasizing the development of domestic defence manufacturing capacity under the “Atmanirbhar Bharat” campaign.

Reforms in the Defence Procurement Policy, such as the introduction of categories like “Buy Indian – Indigenously Designed, Developed and Manufactured” (IDDM) have been pivotal in prioritizing procurement from domestic sources. Additionally, the introduction of Defence Acquisition Procedure (DAP) 2020 and the release of lists for indigenization have further bolstered the domestic defence manufacturing ecosystem.

A striking feature of this success story is that defence public sector units (DPSUs) and private-sector companies have both played a great role in this story.

Skyrocketing Numbers

India’s defence exports have touched a record Rs. 20,800 Crores (approximately US$ 2.6 billion) in the financial year 2023-24.

This is a growth of 32.5% over the last financial year. If the last decade is compared with the previous one, the growth picture gets more dramatic. Defence exports have grown 21 times from Rs. 4,310 Crores from 2004-05 to 2013-14 to Rs. 88,320 Crores from 2014-15 to 2023-24.

This explosive growth is fuelled by a strong indigenisation push by the government aimed at achieving self-reliance in defence. The rapid growth in defence manufacturing and exports has powered many PSU defence stocks to new highs.

Though the private sector has led the growth, defence PSUs too have made significant contributions. The private sector and the PSUs have contributed about 60% and 40% respectively.In addition, there has been a rise in the number of export authorisations issued to the defence exporters during 2023-24. From 1,414 export authorisations in 2022-23, the number jumped to 1,507 in 2023-24.

Products India Export

According to the Ministry of Defence, India exports systems such as the Dornier-228 aircraft, 155 mm advanced towed artillery guns, Akash missile system, radars, simulators, mine-protected vehicles, armoured vehicles, Pinaka rockets and launchers, thermal imagers, body armour, line replaceable units, parts and components of avionics (aviation electronics), and small arms.

In a major fillip to India’s hopes of becoming an exporter of defence platforms, the Philippines signed a deal to buy three batteries of the BrahMos missile in January 2022.

The US$ 375 million agreement is understood to be the first major military export deal for New Delhi. India, the top importer of weapons in the world, has been pushing aggressively for greater self-reliance in this arena.

The country has also set ambitious defence export targets and aims to eventually become a net exporter of defence products.

This delivery of the weapons system to the Philippines is a big victory for India in that direction. It is crucial for morale in the military-industrial complex (MIC) domestically.

Internationally, and especially in the Southeast Asian region, it serves to bolster India’s reliability as a reliable new player when it comes to weapons exports. BrahMos missiles alone can take India’s defence exports to US$ 3 bn by 2026.

While Indian defence manufacturers have progressed significantly over the past 10 years, foreign companies are also coming to India for manufacturing.

Notably, the Israel Weapon Industries (IWI) is collaborating with the PLR company to manufacture rifles in the country.

A Korean company is partnering with L&T to manufacture Howitzer guns. Likewise, Airbus is manufacturing C-295 aircraft for the Indian Air Force in Vadodara, Gujarat. Additionally, the Israeli company Elbit Systems and Aerospace in collaboration with Adani Defence gave the Indian Navy its first ‘Made In India’ long-endurance drone, the Drishti 10 Starliner UAV.

To promote self-reliance, the Defence Ministry has initiated the issuance of multiple ‘import embargo’ or negative arms import lists. As of May last year, the Modi government had announced a list of 928 military items that will come under a phased import ban between December 2023 and December 2029.