Defence exports

In News: India’s defence exports for 2021-22 were estimated at ₹13,000 crore, the highest ever.

• The S. was a major buyer, as also nations in Southeast Asia, West Asia and Africa.
• The private sector accounted for 70% of the exports, while public sector firms accounted for the rest.
• Earlier, the private sector used to account for 90% but now the share of defence public sector units had gone up.
• While India’s defence imports from the U.S. have gone up significantly in recent years, Indian companies have been increasingly becoming part of the supply chains of U.S. defence companies.
• In January, India signed a $374.96-million deal with the Philippines, its single biggest defence export order, for the supply of three batteries of shore-based anti-ship variant of the BrahMos supersonic cruise missile.

Issues retarding defence exports

• Excess reliance on Public Sector: India has four companies (Indian ordnance factories, Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and Bharat Dynamics Limited (BDL)) among the top 100 biggest arms producers of the world.
• Policy delays: In the past few years, the government has approved over 200 defence acquisition worth Rs 4 trillion, but most are still in relatively early stages of processing.
• Lack of Critical Technologies: Poor design capability in critical technologies, inadequate investment in R&D and the inability to manufacture major subsystems and components hamper the indigenous manufacturing.
• Long gestation: The creation of a manufacturing base is capital and technology-intensive and has a long gestation period. By that time newer technologies make products outdated.
• Unease in doing business: An issue related to stringent labour laws, compliance burden and lack of skills, affects the development of indigenous manufacturing in defence.
• Multiple jurisdictions: Overlapping jurisdiction of the Ministry of Defence and Ministry of Industrial Promotion impair India’s capability of defence manufacturing.
• Lack of quality: The higher indigenization in few cases is largely attributed to the low-end technology.
• Lack of R&D: A lip service to technology funding by making token allocations is an adequate commentary on our lack of seriousness in the area of Research and Development.
• Lack of skills: There is a lack of engineering and research capability in our institutions.

Steps taken by the Centre to boost defence production

• Licensing relaxation: Measures announced to boost exports since 2014 include simplified defence industrial licensing, relaxation of export controls and grant of no-objection certificates.
• Lines of Credit: Specific incentives introduced under the foreign trade policy has facilitated Lines of Credit for countries to import defence product.
• Indigenization lists: On the domestic front, to boost indigenous manufacturing, the Government had issued two positive indigenization lists consisting of 209 items that cannot be imported.
• Budgetary allocation: In addition, a percentage of the capital outlay of the defence budget has been reserved for procurement from domestic industry.

There is a need to create an environment for greater participation of private industry, a stable macro-economic and political environment, and a transparent business environment which encourages fair competition.

Source: The Hindu

Previous Year Question

Q.1) With reference to the international trade of India at present, which of the following statements is/are correct? (2020)

1. India’s merchandise exports are less than its merchandise imports.
2. India’s imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years.
3. India’s exports of services are more than its imports of services.
4. India suffers from an overall trade/current account deficit.

Select the correct answer using the code given below:

1. 1 and 2 only
2. 2 and 4 only
3. 3 only
4. 1, 3 and 4 only