Thursday, 02 May, 2024
India's defence production capabilities were significantly expanded last year, and this resulted in a rise in exports. Image Source: IANS
Over 100 firms are actively exporting defence products. Multiple sophisticated defence systems including 155 mm Advanced Towed Artillery Guns, Brahmos Missiles, etc, have been exported to other countries.
India's defence exports increased by 32.5 percent in FY24 over the previous fiscal year to an all-time high of Rs 21,083 crore in fiscal year 2023–2024. Defence Minister Rajnath Singh said that the "defence ministry has taken several initiatives to spur India's defence manufacturing and exports," highlighting the significant rise in the private sector and Defence Public Sector Undertakings (DPSUs) over the years.
India's defence production capabilities were significantly expanded last year, and this resulted in a rise in exports. The Ministry of Defence saw a spike in defence exports the year before, which was a historic accomplishment. The surge in demand for Indian defence equipment including aircraft carriers, light combat helicopters, LCA-Tejas, and more worldwide drove the growth in exports.
Government has taken various steps to improve Indian defence products and make them competitive globally. To achieve "Aatmanirbharta in Defence," the government has placed a focus on the indigenization of several defence products. The locally produced indigenous goods become globally cost competitive, and it also makes it easier for MSMEs to be integrated into the global supply chain. Regularly and without charge, the DRDO transfers new technologies to the industries. Industries have been provided free excess to DRDO patents. DRDO conducts Niche Technology Demonstrations by engaging industries. This provides a dual benefit by assisting industries with user inputs for product improvement and for self-testing and evaluation of their products in field conditions.
Source: Ministry of Defence
Weapon Simulators, Torpedo Loading Mechanisms, Alarm Monitoring & Control, Night Vision Monocular & Binocular, Light Weight Torpedo & Fire Control Systems, Armored Protection Vehicles, Weapons Locating Radar, HF Radio, Coastal Surveillance Radar, etc. are some of the major defence equipment exported over the past five years. At present, the exports are being made to more than 85 countries all over the world. Names of the countries cannot be divulged due to strategic reasons. Over 100 firms are actively exporting defence products. Multiple sophisticated defence systems including 155 mm Advanced Towed Artillery Guns, Brahmos Missiles, etc, have been exported to other countries.
Apart from high exports of indigenous defence equipment, the government has also laid a emphasis on boosting India’s indigenous defence production. The value of defence production in the financial year 2022-23 has crossed the mark of Rs 1 lakh crore for the first time ever. “The current value of defence production in FY 2022-23 is a rise of more than 12 percent over FY 2021-22, when the figure was Rs 95,000 crore,” the defence ministry said in a statement. The ministry has been working actively to address issues and develop defence production in the nation in conjunction with defence industry and their organisations.
Source: Department of Defence Production, Ministry of Defence
The inclusion of Micro, Small, and Medium Enterprises (MSMEs) and startups into the defence supply chain is one of the policy reforms the government has made, according to the ministry, to make doing business easier. According to the ministry, these policy changes have promoted active involvement from a range of businesses, including MSMEs and start-ups, in the design, development, and production of defence products.
Under the Defence Acquisition Procedure (DAP) 2020, highest preference is provided to the ‘Buy Indian (Indigenously Designed Developed and Manufactured -IDDM) under which at least 50 percent material in a defence equipment should be ‘Indian Component (IC)’ as compared to 40 percent in the Defence Procurement Procedure (DPP), 2016. Also, a new category ‘Buy (Global-Manufacture in India) was introduced in the DAP 2020 in order to incentivise the foreign companies to manufacture in India. It also allows the foreign entities to set up Maintenance, Repair and Overhaul (MRO) facilities in India.
Source: Department of Defence Production, Ministry of Defence
The central government has also taken a number of steps for the promotion of MSMEs in the defence sector. Defence procurement worth Rs 5,463.82 crore was procured from the MSMEs in the year 2020-21. The value of defence procurement from MSMEs in 2019-20 was Rs 4,603.95 crore. During the last five financial years (2018-19 to 2022-23), 239 capital acquisition contracts have been signed for procurement of defence items/equipment. Out of which, 168 contracts accounting for 68 percent of total contract value have been signed with Indian vendors including MSMEs. Around Rs 500 crore have been sanctioned for Defence start-ups from 2021-22 to 2025-26.
As per the report of the Dhirendra Singh Committee, as of 2018, nearly 6,000 MSMEs across the country supply components and subassemblies to the DPSUs, Ordnance Factories (OFs), DRDO and private industries. The global defence industry, dominated by a few Original Equipment Manufacturers (OEMs), works in close coordination with the SMEs and their prime contractors. The reason why OEMs/prime contractors prefer to work with the SMEs is because of their innovative capabilities in niche manufacturing, greater flexibility, lower overhead costs and ability to learn and absorb new technologies. Also, almost 80 percent of components, aggregates and assemblies of complex weapon systems and aircraft are made by the MSMEs, which are part of the supply chains.
41 production units of Ordnance Factory Board (OFB) have been converted into 7 DPSUs to enhance functional autonomy, efficiency and unleash new growth potential and innovation in Ordnance Factories. Recently, the Department of Military Affairs, Ministry of Defence released the 5th positive indigenisation list. These lists contain a roadmap of those weapons, arms and systems that India will not import in future. More than 4666 items are included in these lists which will not be imported and will be manufactured in India. The list also provides an excellent opportunity for ‘Startups’ as also MSMEs which will get tremendous boost from this initiative and lead to creation of a world class defence industrial ecosystem in the country. 98 more Defence Items worth more than Rs 1,40,000 Crore will be procured under the 5th indigenisation list.
In December 2019, the Department of Military Affairs (DMA), or the Sainya Karya Vibhag, was created in the Ministry of Defence (MoD). Inter alia the subjects allocated to the DMA include promoting jointness in procurement, training and staffing, optimal utilisation of resources by bringing about jointness in operations, including through establishment of joint/ theatre commands,” and “promoting use of indigenous equipment.
