Indian defence Export

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Will India achieve its defence export target fixed for 2025?

By Jai Kumar Verma

New Delhi. 18 October 2022. Export in defence is a story every nation wants to tell but how many actually get down to writing it is the million-dollar question. Capability to design, produce, market, and eventually sell defence arms and equipment is a niche ability and very few nations are able to achieve it.
India which is a biggest importer of arms and ammunition after Saudi Arabia is determined to enhance its indigenous production under ‘Make in India’ policy. India also plans to increase its export of weapon systems to Rs.35,000 crores ($4.87 billion) by 2025.

India’s defence exports increased 334% in last five years. Defence Minister Rajnath Singh stated that India is ready to export Light Combat Aircraft, helicopters, radars, artillery guns, tanks vehicles, missile systems etc. India is also exporting arms & ammunition, weapon spares, chemicals & explosives, parachutes, leather and clothing items to more than 75 countries including USA, Germany, Belgium, Thailand, Malaysia, Indonesia, Turkey, Israel, Sri Lanka, Bangladesh, Egypt, Kenya etc.

In 2015-16 India’s defence export was only Rs. 2,059 crores, it increased to Rs.9,115 crore, in 2019-20 it got a boost of 54 percent in 2020-21 and it became Rs.12,815 crore. In the first quarter of 2022-23 (April-June) India exported defence items worth Rs. 1,387 crore. It is all set to export Indo-Russian jointly produced BrahMos cruise missile worth $375 million to Philippines.

The improvement in Indian defence industry sector is crucial for the safety, security, and development of the country. India, which has two hostile neighbours, maintains large defence forces and the total strength of active defence personnel is about 1.44 million. Besides it India’s voluntary military strength is 5.1 million people. India amended its defence procurement, acquisition, and manufacturing policy with the prime object of reducing the import of defence equipment and increase the export of weapon systems. India’s Defence Production Policy aims that India should be in the top five global defence manufacturer within few years.

At present Delhi imports more than 50% defence products. Now government has allowed private sector to manufacture defence items. Government is working on dual strategy, on one hand it wants to enhance its defence exports and on the other hand it is emphasising on ‘Make in India’ programme under which more emphasis is given on ‘indigenisation’ of military hardware. Delhi wants to reduce import of defence hardware and platforms through its production within the country. Production of defence equipment under ‘Make in India’ creates jobs, saves foreign exchange, builds up manufacturing base and creates an ecosystem for safety and security of the country.

India imported about 9.5% of total arms export of the world between 2016-2020. Nonetheless as India is emphasising on ‘Make in India’, in 2022 it stopped import of several defence equipment and platforms including helicopters, short range missiles and all-terrain vehicles (ATVs) for Coast Guard. Defence Ministry also issued lists which included armaments and platforms which would be produced in India by December 2025.

A post on the Defence Research and Development Organisation (DRDO) website dated 22 March 2021 mentions that “During the past 3 years, 79 projects amounting to Rs.8201 Crores directly pertaining to development of new defence equipment i.e., Cruise Missile, Anti-Ship Missile, Surface-to-Air Missile, Air-to-Air Missile, Extended Range Anti-Submarine Rocket, Mounted Gun System, Ammunitions, Electronic Warfare System, Radars, Torpedoes, High Endurance Autonomous Underwater Vehicle etc. have been undertaken.”

The website also mentions that “Some of the DRDO developed systems which are likely to be available to our defence personnel during 2021-23 are as follow: ASTRA Missile, Anti Drone System, SATCOM Devices in 2021, QRSAM, ADFCR, Helina, ADTCR, Guided Bomb, NAG in 2022 and NGARM, SAAW in 2023.

The website further reveals that “Many DRDO developed technologies such as Battle Field Surveillance Rader (BFSR), Joint Venture Protective Carbine (JVPC) Jammers, 5.56 mm Rifle, 40 mm Under Barrel Grenade Launcher (UBRL), Oleo Resin (OR) Grenade etc are being utilized by the State Police.”
The DRDO has also upgraded several systems including Arjun Mk-1A, Akash-NG, Light Combat Aircraft Mk-1A, Medium Power Radar-Extended Range, PINAKA- Extended Range, Guided Electronics & Communication System: Unified Mission Computer for SU-30 MKI aircraft, Internal EW System for MIG-29 Upgrade Aircraft, EW systems for Naval platforms.

The present government since 2014 has adopted an aggressive policy to increase the exports of defence items. According to Stockholm International Peace Research Institute (SIPRI) three Indian companies namely Hindustan Aeronautics Limited (HAL), Ordinance Factory Board (OFB) and Bharat Electronics Limited (BEL) are in the top-100 defence companies of the world.

In 2019 DRDO constituted DRDO Policy and Procedures for Transfer of Technology under which it signed transfer technology transfer contracts with 16 Indian companies and three start-ups under which they agreed to manufacture defence items required by Indian defence forces. In 2019 Defence Minister Rajnath Singh also went to Russia with delegation of about 50 Indian defence companies so that joint ventures can be started with Russian companies to produce defence items.

Last month Armenia placed an order of US$ 245 million to India for the purchase of heavy weapons including rockets, missiles, and other ammunition. The relations between Armenia and Azerbaijan have again become tense over Nagorno-Karabakh. In 2020 Azerbaijan liberated Nagorno-Karabakh region from the possession of Armenia. Turkey which is friend of Pakistan supported Azerbaijan openly against Armenia. Nagorno-Karabakh was part of Azerbaijan but as the majority population is of Armenian origin the area was given to Armenia. Azerbaijan is mostly Muslim while Armenia has Christian majority. Turkey supports Azerbaijan while Russia supports Armenia, although as both countries were the parts of former USSR, Russia has cordial relations with Azerbaijan too.

India has agreed to supply Pinaka multi-barrel rocket launchers, anti-tank rockets as well as ammunition to Armenia. The Pinaka rockets were developed by the DRDO which has 52 laboratories all over India and these laboratories are involved in the developing of defence technology. More than 5000 scientists and nearly 25,000 subordinate staff is working in DRDO. These scientists are involved in different fields including land combat engineering, aeronautics, armaments, electronics, missiles, and development of naval systems.

The Pinaka multi-barrel rocket launchers were developed by DRDO but now manufactured by private Indian firms. Indian army is also using Pinaka rocket system which can fire 12 rockets in 44 seconds. For the first time India is exporting Pinaka rockets to any other country. India also exported Swathi radars to Armenia in 2020 worth $43 million. India supplied Swathi radars to Armenia when war was going on between Azerbaijan and Armenia.

The export of armament to Armenia was also significant from strategic angle as a nexus was developing between Pakistan, Turkey, and Azerbaijan and both are supporting Islamabad on Kashmir issue. In 2017 Turkey, Azerbaijan and Pakistan signed a Trilateral Ministers Agreement which established security cooperation between them. Besides geo-strategic importance of India -Armenia arms deal, India can export weapon systems to Armenia in future too. In 1995 both India and Armenia signed a treaty on Friendship and Cooperation.

Purchase of Indian weapon systems also indicates that Armenia wants to lessen its dependence on Russia because Moscow also observes a balance while selling armaments to Azerbaijan and Armenia. Secondly now Russian arms are also becoming costly. Pakistan and China both launched a disinformation campaign against Indian weapon systems but Yerevan had not given any credence to it.

The defence equipment market is quite big but there is cut throat competition in the market. The main players US, Russia, France, China, and Germany account for 77 percent of total arms export. According to SIPRI India’s share in exports of defence equipment is meagre 0.2% and is on 23rd place out of 25 major arms exporters list.

India should utilise the services of Defence attaches who are posted in different Indian missions abroad. These defence attaches are knowledgeable and can reiterate the qualities and capabilities of the defence systems accurately. Our foreign missions and Ministry of External Affairs should also make efforts to procure orders for defence equipment.

India should improve trial and testing infrastructure of all the weapons as end user whether in India or abroad test the weapon systems stringently. India should also try to use Chittagong and Khulna ports for export to ASEAN nations.

In the present world, foreign policy plays an important role in the arms export. Currently India’s foreign policy is appreciated all over the world and its stature has considerably enhanced. In view of policy changes India would be producing good quality armaments in affordable cost. Both these things would be helpful in augmenting India’s defence export and it is expected that India would achieve its target in 2025 or before that date.

(Jai Kumar Verma is a Delhi-based strategic analyst and Life member of United Services Institute of India and member of Manohar Parrikar Institute for Defence Studies and Analyses. The views in the article are solely the author’s. He can be contacted at editor.adu@gmail.com).

Indian Defence Vying To Sell Despite Maximum Purchase

 The biggest importer of arms plans to enter export market in a big way

By JK Verma

New Delhi. 25 July 2016. Defence import to export is too long a bridge to cross for any nation, and more so for India. A nation which is at the top of the list of nations defence importers due to a strategically turbulent neighbourhood and nowhere in the top twenty list of exporters, India has in the last two years started exploring a market for defence exports. And we can only credit Make in India mantra for this change in thought and action of the powers in South Block.

A metallurgical engineer from Indian Institute of Technology, Mumbai, Manohar Parrikar, the Defence Minister is working hard to transmute India from largest importer of military hardware into an exporter of armaments. In fact India should enter the lucrative market of arms export and side by side it can continue to import weapons of cutting edge technology.

 India is also learning a lesson or two from China which is not only the 3rd largest exporter of armaments is also one of the 10 top importer of weapons. China by increasing its indigenous arms production has reduced its imports substantially.  China augmented its export of defence items up to USD 1.5 billion in 2014.

It is significant that the present government has circumvented the old idealistic approach of not entering in lucrative arms market with full vigour. India at the time of independence had several ordnance factories and capable pool of talented people but India had not invested in these plants and research was totally neglected. Now country is paying heavy price for the same. India imported military equipment worth USD 5.57 billion last year.

Latest decision of Government of India about enhancing the limit of Foreign Direct Investment in defence sector from 49 percent to 100 percent is laudable as leading foreign defence companies may like to establish their manufacturing units in India. Now the companies will have full control on their investment and can sell weapons to India as well as to other countries.

The defence ministry is simplifying the complex defence production policy and making it more transparent so that indigenous private sector companies also enter in defence production.

The major foreign defence companies would also team up with Indian defence firms like TATA, Mahindra and Mahindra Group, Hero Group, Reliance Anil Dhirubhai Ambani Group, Bharat Forge, Larson and Toubro Ltd. Etc.

According to estimates India’s defence budget may swell to USD 620 billion within seven years. India imported defence equipment worth Rs.103535 crores in last five years while India’s military exports are meager Rs.1644 Crores in last three years. The export figures include exports from 39 Ordnance Factories, five Defence Public Sector Undertakings (DPSUs), four Shipyards as well as private sector companies. In view of the total global annual sale of armaments of USD 64 billion, India’s exports are depressing.

Numerous countries including Afghanistan, Algeria, Belgium, Ecuador, Indonesia, Myanmar, Nepal, Sudan, Vietnam, Oman wants to import arms and ammunition from India. Few technological advanced countries like US purchased flight control panels & forging equipment while MIG and Sukhoi 30 aircraft spares were purchased by Russian Federation and India sold transmitting tubes to United Kingdom.

India also exported Cheetah helicopters to Afghanistan, Dhruv helicopters to Nepal, Jaguar aircraft parts to Oman, Sukhoi 30 and MIG spares to Malaysia and offshore patrol vessels and ammunition to Mauritius for which an agreement of USD 58.5 million was signed between GRSE Kolkata and Republic of Mauritius.

India needs to expand the trifling range of its export items which is insignificant at present. Modi governments’ ‘make in India” campaign may give fruitful results. Several private enterprises would join the campaign and produce quality arms and ammunition. Defence Minister has put an ambitious target of export of armaments worth USD 3 billion within a decade, which is 20 times of present export. According to a senior government official the target can be achieved, if India gets technological knowhow, FDI and investments from private sector.

India should also try to become the member of Wassenaar Arrangement which is one of the four export control regimes as it will be helpful in increasing country’s exports. At present 41 countries are members of Wassenaar Arrangement and India should align its production as well as defence exports according to the Wassenaar Arrangement.

The list includes electronic items, computers, telecommunications, items related o information security, sensors and lasers, marine, navigation and Avionics, Aerospace and Propulsion, tanks, armored vehicles, artillery guns, aircraft and helicopters, warships, missiles, small arms etc. Few countries like China and Israel are not members of Wassenaar Arrangement but are exporting according to its list.

The private sector should immediately chalk out the plan as per Wassenaar Arrangement list and according to their capability they should get permission from government and create infrastructure for the production of weaponry and also try to obtain orders in India as well as from abroad.

India has already become member of Missile Technology Control Regime (MTCR) which will be helpful in export of missiles as well as missile systems. India has already received order from Vietnam to export BrahMos short-range supersonic cruise missile which can be launched from submarines, ships, aircraft and land. BrahMos Aerospace is consistently enhancing the capability of BrahMos missile and it is expected that by 2017 it would achieve the speed of Mach 7.

Besides Vietnam several other countries including Indonesia, Brazil, South Africa, Chile, Malaysia and UAE also showed interest in import of BrahMos missiles as well as other missiles developed by DRDO. Export of BrahMos and other missiles would be a great boost for India’s export and would help to achieve the export target fixed by defence minister.

Strategically selling of BrahMos to countries like Vietnam will be significant as it may be a check on China. Previously India was reluctant to sell BrahMos to Vietnam considering the adverse reaction from China however present government has taken a correct decision that if China can sell nuclear technology and missiles to Pakistan then India should not hesitate to sell armaments including BrahMos to Vietnam and other countries.

India should also try to export parts of aircraft, helicopters, naval ships, Airborne Radar systems, ammunition, bombs, torpedoes, and training equipment. India has capability and expertise to produce these items and these articles are in great demand. Modi government has also relaxed the rules which may be helpful in increasing the production and export of defence articles.

India should also try to export land based weapons which will include light and heavy machine guns, assault rifles, landmines, artillery guns, tanks, armored personnel carriers, rockets, small arms etc. There is great demand of these weapons by security agencies of several countries as well as by terrorist outfits. The smuggling of these weapons is also done at large scale. India being an idealist nation may not involve in smuggling of these weapons but these equipment and their ammunition can be sold to governments.

The Research and Development of defence equipment is a very costly and time consuming process. Most of Indian companies lack capability as well as interest in R&D. On the other hand R&D facilities in Public Sector Undertakings are underutilized hence reliable private sector companies may be permitted to use R&D facilities of PSUs.

Export of BrahMos, different types of missiles, aircraft including supersonic Tejas LCA (Light Combat Aircraft) a lightweight, multi role, single engine aircraft, ‘Akash’ a surface to air defence system, Prahar class of tactical missiles system and other defence items would create a big infrastructure which will earn much needed foreign exchange and would generate direct as well as indirect employment opportunities. There is no need to emphasize that LCA Tejas is one of the best fourth generation supersonic fighter jet and several countries have already showed their interest to buy these jets.

The price of these weapons are less in comparison to all the countries including China. In fact Indian price of long-range missiles may be one third or even less than the Chinese price.

Government has to enhance the grant for research and development, at present DRDO budget is meagre 5to 6 percent of defence budget which is inadequate.  It is heartening that the present government is making sincere efforts to augment export of defence items. India having a large pool of young scientists’ country would certainly go ahead in production and export of military equipment.

But there’s a long way to go. Defence Public Sector Units  account for more than 80 percent of defense production and are already stretched. The key to this success will be the private industry’s role, involvement and ability to produce on their own and also manufacture in partnership with the foreign OEMs, which they are quite capable and enthusiastic  of. So better late than never.

(Jai Kumar Verma is a Delhi-based strategic analyst and a retired intelligence officer officer. The views in the article are solely the author’s. He can be contacted at editor.adu@gmail.com)

Note : Article was republished in Center for Asia Studies