India Now Exports Arms
Though India is known to be one of the largest importers of arms in the world, enough attention has not be given to the fact that in recent years India has also become an exporter of arms. There are countries which are both exporter and importer of arms. China is one of them. India also has joined the list of such countries.
The value of exports of defence items including major items in FY 2014-15 and 2020-21 was Rs 1,940.64 crore and Rs 8,434.84 crore respectively.
Of course, the names of the major defence items exported cannot be divulged due to strategic reasons. But the fact remains that many reforms/steps have been taken to boost Defence exports and enhance ease of doing business during the last five years. These are as follows:
–> Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) Category 6 titled “Munitions List” that was hitherto “Reserved” has been populated and Military Stores list notified vide Notification No.115 (RE-2013)/2009-2014 dated 13th March 2015 stands rescinded.
–> The Director General of Foreign Trade (DGFT) vide Public Notice No. 4/2015-20 dated 24th April, 2017 has delegated its authority and notified Department of Defence Production (DDP) as the Licensing Authority for export items in Category 6 of SCOMET. The export of items specified in Category 6 (Munitions List) except those covered under Notes 2 & 3 of Commodity Identification Note (CIN) of the SCOMET is now governed by the Standard Operating Procedure issued by the Department of Defence Production (DDP), Ministry of Defence.
–> Standard Operating Procedure (SOP) for the export of munitions list items have been simplified and placed on the website of the DDP.
–> A completely end-to-end online portal for receiving and processing export authorisation permission has been developed. The applications submitted on this portal are digitally signed and the authorisations are also issued digitally, at faster pace.
–> In repeat orders of same product to the same entity, consultation process has been done away with and permission is issued immediately. For the repeat order of same product to different entity, the consultation earlier done with all stakeholders is now limited only with Ministry of External Affairs (MEA).
–> In Intra-Company business (which is especially relevant for outsourcing of work by defence related parent company abroad to its subsidiary in India), the earlier requirement of getting End User Certificate (EUC) from the Government of importing country has been done away with and ‘Buying’ Company is authorized to issue the EUC.
–> The requirement of Government signed EUC in cases of providing engineering services (ToT related to Munitions List) to Wassenaar Arrangement (WA) Countries has been dispensed with.
–> Legitimate export of systems/platforms for civil end use to WA Member countries is considered subject to submission of EUC or import certificate or equivalent document issued by the Government of importing country.
–> The legitimate export of the parts and components of small arms and body armour for civil use are now being permitted after prior consultation with MEA.
–> For export of items for exhibition purposes, the requirement of consultation with stakeholders has been done away with (except for select countries).
–> Powers have been delegated to DRDO and CMDs of DPSUs for exploring export opportunities and participation in global tenders.
–> New simplified End User Certificate Format for Parts & Components has been provided in SOP.
–> Validity of Export Authorization for export of parts & components has been increased from 02 years to date of completion of order/component whichever is later.
–> A new provision for re-exporting parts and components for undertaking repair or rework to provide replacement for a component under warranty obligation is inserted in the SOP as a sub-classification of repeat orders.
–> MHA vide Notification dated 1.11.2018 has delegated its powers to Department of Defence Production to issue export license under Arms Rules 2016 in Form X-A, for parts & components of small arms. With this the Department of Defence Production becomes the single point of contact for exporter for export of parts and components of Small Arms & Ammunitions.
–> The Government has notified the Open General Export License (OGEL) – a one-time export license, which permits the industry to export specified items to specified destinations, enumerated in the OGEL, without seeking export authorisation during the validity of the OGEL. OGEL has been integrated with end-to-end online Portal.
–> Scheme for Promotion of Defence Exports has been notified to provide an opportunity to the prospective exporters an option to get their product certified by the Government and provides access to the testing infrastructure of Ministry of Defence for initial validation of the product and its subsequent field trials. The certificate can be produced by the prospective exporter for marketing their products suitably in the global market.
–> A separate Cell has been formed in the Department of Defence Production to co-ordinate and follow up on export related action including enquiries received from various countries, sharing the leads with private sector & public sector companies and facilitate exports.
–> In order to boost defence exports, regular webinars are being organized with Friendly Foreign Countries (FFCs) under the aegis of DDP, MoD through Indian Missions abroad and Industry Associations with active participation from Indian Defence Industries.
–> A Scheme to provide financial support to Defence Attaches for taking up actions for promoting exports of India made defence products both of public and private sector in the countries to which they are attached has been notified.
–> To enhance functional autonomy, efficiency and unleash new growth potential and innovation in Ordnance Factories, the Government has converted 41 Ordnance Factories into seven Defence Public Sector Units (DPSUs), 100% Government owned corporate entity (ies).
It is to be noted that India’s defense ecosystem got a shot in the arm with the inauguration of the 2020 edition of the defense exposition in Lucknow in the presence of the Prime Minister Modi, Defense minister Rajnath Singh, Uttar Pradesh chief minister Yogi Adityanath and the three service chiefs. “Our aim is $5 billion of defence export in next five years”, Prime Minister Narendra Modi had said in his address at the grand show.
Speaking at the inauguration the Prime Minister had pitched for make in India in defense. Modi had said that Research and development were the priorities of his government and that India can learn much from her success in the space domain where the country has made a lot of progress in PSLV as well as satellite technologies.
Accordingly, over the last two years, Defence Minister Rajnath Singh has really led the efforts aimed at India moving away from import substitution to developing new weapon systems as a priority. He has been repeatedly asserting that the country has now a larger goal for India to be the global hub of defence items. That weapons should not only be made in India but also be made for the world has now become the government’s policy. This obviously leads to a situation of India having the ability to produce and export.
In other words, the focus is not just on making for the Indian defense forces but expand the envelope in terms of both quality and a larger order- book for the world market.
It is said that the aim of the government is to export arms worth $5 billion in five years. This is an ambitious goal which will need global benchmarking, but it is doable as Africa and Latin America as well as South- East Asia are potential target markets. India has the potential to export the Light Combat Aircraft well as the Brahmos supersonic missile to countries such as Vietnam and Indonesia. In South America there is a scope for missiles and sensors exports. Some companies such as Larsen & Toubro’s joint venture with European missile maker MBDA have a missile integration facility in Tamil Nadu that will deliver complete missile systems and include scope for the export markets. India’s HAL has signed a new deal where it will collaborate with Israel Aerospace Industries Limited (IAI) to manufacture and potentially export various unmanned Ariel vehicles from India.
It is indeed nice that the Modi government is determined to move away from the tag of one of the largest importers of weapons to developer of weapon systems. To that end, the defense – exports is significant as a platform for getting buyers and seller together and also increasing the scope for transfer of technology.
The fact that both the Prime Minister and Defence Minister have invested so much political capital into this export-mission is pushing the bureaucrats and technocrats in the defence sector to give their best for the “Make in India” agenda. Now, we are witnessing indeed the development of the defense ecosystem where smaller players – especially those from the private sector –are working with some of the larger companies in producing and developing weapons and platforms. This is very good news.
By Prakash Nanda