Buoyed by a recent spurt in defence-related exports, the Modi government has set ambitious targets for overseas sales by the Indian military-industrial sector over subsequent few years.
Specifically, it’s been proposed that 25% of the annual turnover of every Defence Public Sector Undertaking (DPSU) and therefore the Ordnance Factory Board (OFB) should come from exports by 2022-23, whilst the private sector is being encouraged to spice up defence exports.
The overarching theme is for India to become a ‘net exporter’ of defence items by the mid-2020s. While such a goal is commendable, given India’s got to sustain influence with its partners and to get better economies of scale, it can’t be sustainably achieved without India’s own military placing timely orders for indigenous equipment that have export potential.
Moreover, weapons that don’t find favour with the domestic military usually don’t find buyers within the international market either.
The draft ‘Defence Production Policy 2018’ explicitly seeks to realize an annual export turnover of Rs 35,000 crore by 2025. In aid of this objective, the Ministry of Defence (MoD) has gone about streamlining its export control licensing regime, removed licensing requirements for several items altogether, created an end-to-end offset processing portal, while also fixing a defence investor cell to process queries and redress grievances.
These measures have sufficed to extend the worth of defence export authorizations within the past few years, which have risen from Rs 1,650 crore in 2016-17 to Rs 10,500 crore in 2018-19.
However, most of this growth has come from enhanced exports of components and sub-assemblies, a serious portion of which is on account of ‘offset discharge’ by foreign original equipment makers (OEMs) selling wares to India.
In fact, a number of this may find its way back to India as a part of major platforms built abroad. Naturally, encouraged by export growth in these categories, New Delhi is looking to tap further opportunities to tie-up with foreign OEM supply chains via the licenced production of major platforms as a part of the ‘strategic partnership’ model.
But this not getting to be enough for India to create its position as an arms supplier within the international market. For that, India must start exporting frontline weapon systems and platforms of indigenous design, alongside heightened exports of munitions and sensors of varied types.
within the case of munitions and sensors, India has already begun to secure respectable orders from allies like the UAE and Myanmar. However, India is yet to achieve exporting contemporary artillery systems or maybe air defence systems, ditch armoured fighting vehicles or fighter that’s not surprising as long as domestic orders for indigenous systems in these categories are mostly piecemeal which too with interminable delays between tranches.
A case in point is that the Pinaka multi-barrel launcher (MBRL), which is already a neighborhood of the Indian Army’s arsenal and that the private sector is that the lead supplier.
Orders for brand spanking new Pinaka regiments are ‘in the works’ forever, whilst the system finds pride of place within the MoD’s shiny new export booklet. Obviously, the availability chain for the Pinaka is at a risk of withering away, a incontrovertible fact that potential international customers are sure to note of.
Foreign militaries typically import systems during which the supplier country’s own military has reposed faith. Not only does it function a top quality certificate, it’s also indicative of the upkeep and spares support that a possible importer can expect.
The after-sales support for systems built only in small uneconomic lots is probably going to be uneven at the best . Moreover, large production runs of indigenously developed equipment are the key to increasing the indigenous content of an equivalent .
This is often especially important in an era where the threat of sanctions looms larger than ever, and customers would want security of supply. therein context, Indian systems with the very best potential for export are people who are currently seeing noteworthy production runs and have high indigenous content.
Here, too, there’s a mindset of ‘let us meet our own requirements first’ that has been getting into the way of a significant export push. It almost seems as if some quarters are wary of abandoning their ‘sole buyer’ privileges instead of embracing the strategic advantages of exporting major defence equipment.
Beyond burnishing India’s geopolitical influence, arms exports will help increase the competitiveness and adaptability of domestic industry, which will obviously get reflected in their overall design and build practices.
The productivity gains from having to satisfy the precise requirements of foreign customers shouldn’t be underestimated.
Be that because it may, given the very fact that for the medium term it’s domestic capacity which will drive exports and not the opposite way around, it’s imperative that enormous orders are placed for indigenous systems that have already passed muster, with repeat orders for improved tranches following soon thereafter.
Otherwise, foreign militaries may prefer to remain content with just watching the photographs they see on the MoD’s brochure.
