Govt policies & incentives driving India’s defence manufacturing, R&D, exports – ET Government

India’s ambitious Defence Production & Export Promotion Policy 2020 envisions making the country a world-leader in defence.

From a feeble Rs. 686 crores in FY 2013-14, India’s defence exports have been growing at a steady pace and in 2023 the country clocked its highest defence export value of Rs. 15,920 crores. India is generally seen as the world’s largest arms importer, but if the defence exports keep growing then, in a few years, the country could count among the world’s major arms exporters.

In a tweet on X in April, in response to Defence Minister Rajnath Singh’s announcement that India’s defence exports have reached an all-time high of Rs 15,920 crore, Prime Minister Narendra Modi posted, “Excellent! A clear manifestation of India’s talent and the enthusiasm towards ‘Make in India.’ It also shows the reforms in this sector over the last few years are delivering good results. Our Government will keep supporting efforts to make India a defence production hub.”

In the last ten years, the Central government has taken a number of measures to encourage defence manufacturing and reduce reliance on imports while encouraging exports. In 2020, the Department of Defence Production published the Defence Production & Export Promotion Policy (DPEPP), which declares that “Self-reliance in defence has been the cornerstone of India’s defence production policy.”

The DPEPP notes that the “size of the Defence Industry, including Aerospace and Naval Shipbuilding Industry, is currently estimated to be about Rs 80,000 crore (2019-20). While the contribution of the Public Sector is estimated to be Rs 63,000 crore, the share of the private sector has steadily grown to Rs 17,000 crore over the years.”

India’s ambitious Defence Production & Export Promotion Policy 2020 envisions making the country a world-leader in defence. It envisions advancements in aerospace and naval shipbuilding sectors, from design to production, with active participation of the public and private sector.

The policy has set the goal of achieving a turnover of Rs 1,75,000 crore ($25 billion) in the defence sector. This includes export of Rs 35,000 crore ($5 billion) in Aerospace and Defence goods and services by 2025. The policy envisages the creation of “an environment that encourages R&D, rewards innovation, creates Indian IP ownership and promotes a robust and self-reliant defence industry.”

Along with the formulation of the DPEPP, the Government of India has taken a number of other steps to promote defence production. In March, the Ministry of Defence notified four Positive Indigenisation Lists comprising 411 major weapon platforms and systems with an embargo on their import from defined timelines.These lists mandate the Defence Public Sector Units (DPSUs) and the private sector to procure certain defence components from indigenous manufacturers.

Another important step taken by the government for promoting defence industry is the decision to earmark 75% of defence capital procurement budget (a significant sum of over Rs. 1 lakh crore) for domestic industry. This announcement was made by Defence Minister Rajnath Singh at the 14th Aero India show in February. In his address Rajnath Singh said that the vision of the Ministry of Defence is ‘Make in India, Make for the World’.

The government has also introduced a liberalised licensing scheme for setting up of greenfield defence manufacturing projects. Line of credit touching nearly $14 billion has been extended to 42 nations of the African Union to encourage them to procure their defence requirements from India. The Indian government sees a big potential in defence partnership with Africa, which they believe will grow fast.

The Ministry of External Affairs is part of the body called Defence Exports Steering Committee (DESC), under the Chairmanship of Secretary, Department of Defence Production, and is playing a significant role in coordinating and promoting the export of defence products from India. The DESC also has representatives from the Armed Forces, DRDO, DGFT and other relevant departments.

While India has made significant gains in defence exports, it is still too early for the country to become recognized as a global arms exporter. India continues to be outside the top-20 global arms exporters list and is a global leader in arms imports. Reforms and financial incentives from the government will have to continue for several more years to put the country in the exclusive club of world’s top arms exporter.

  • Published On Nov 14, 2023 at 05:26 PM IST

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