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Introduction:
Prime Minister Narendra Modi showcased India as an attractive destination for investment in the defence manufacturing sector, saying the country is moving towards becoming one of the leading exporters of military hardware globally. Prime Minister spoke about how the defence sector has rejuvenated its defence production sector in the last eight-nine years – defence exports have increased six times, crossing the figure of 1.5 billion dollars, looking to further increase the export of military hardware to 5 billion dollars by 2024-25. The Prime Minister described Aero India as an example of India’s growing potential, saying it’s not only a show, but a reflection of India’s self-confidence and capabilities. Being held under the theme – The runway to a billion opportunities – Aero India 2023 is seeing the participation of over a 100 countries. More than 700 exhibitors from India and abroad are taking part in the event.
New technologies for enhanced efficiency and security in services
- Every sensor, every platform, they are becoming smart, they are having some kind of intelligence, so that a lot of data is getting collected and being manipulated for making it smart, so that they can become, to some extent, autonomous in taking decisions also.
- From that perspective, this technology, since it can handle very high data rates, it’s a big welcome, even in the military domain, because, another area where it really strikes very well is latency of one millisecond or less.
- Command control applications will find a big use, where one can simply give a command to your UAVs, and all that, and they can do the needful.
- Technology has great potential for military applications.
Status of exports:
- From 2016-17 to 2018-19, the country’s defence exports have increased from ₹1,521 crore to ₹10,745 crore, a staggering 700% growth.
- The value of exports of defence itemsincluding major items in Financial Year 2014-15 and 2020-21 was ₹1,940.64 crore and ₹8,434.84 crore respectively.
- India has set itself an ambitious targetto achieve a manufacturing turnover of $25 billion or ₹1,75,000 crore including exports of ₹35,000 crores in aerospace and defence goods and services by 2025.
Need for defence indigenization:
- For self reliance
- To reduce dependency on foreign player and ensure security of nation
- To conserve or reduce Balance of Payment deficit
- To promote employment and also exports
- To reduce cost of production to India and thereby reduce fiscal deficit. According to the Stockholm International Peace Research Institute (SIPRI), in 2019, India became the third-largest defence spender in the world
Measures being taken by the Government to promote defence exports:
- Simplified defence industrial licensing
- Relaxation of export controls and grant of No Objection Certificates (NOC).
- A committee comprising the Defence Minister, External Affairs Minister and National Security Advisor has been set up to provide faster approvals for the export of major defence platforms.
- Extending Line of Credit (LoC) to foreign countries to import defence products.
- Empowering Defence Attaches in Indian missions abroad to promote defence exports.
Challenges
- Lack of Defence Manufacturing base in India
- Primarily driven by Government ordnance factories and poor private participation
- The public sector (DPSUs/OFs) by far has enjoyed the preferred categorization, particularly for big ticket purchases, when considering the Indian route, despite its poor track record as regards time and cost overruns, inefficiencies and poor financial performance.
- The defence industry per-se being a capital intensive industry with high risks on investments leaves very few private players in the arena. DPSUs, on the other hand, have not done much to promote proficient business practices by involving the industry and Micro, Small,and Medium Enterprises (MSMEs).
- The report of the 33rd Standing Committee on Defence – Indigenization of Defence Production: Public Private Partnership was highly critical of the steps taken by the government to promote indigenization
- High costs and involved and lack of assured market
- Poor technological transfer by foreign companies
- Lack of Data
- Assessment of Degree of Indigenisation: As of today, no scientific system is in place to assess the extent/ level of indigenisation achieved by defence production entities in the country.
- Bureaucratic delay and licensing issues:there is still no eas of doing business in defence industry.: Investment in the defence sector is subject to compliance with the licensing requirements stipulated by the Department of Industrial Policy and Promotion (DIPP)
Conclusion:
- India has set a target of clocking defence exports worth USD 5 billion by 2024.
- 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.
- To provide faster approvals for export of major defence platforms, a committee comprising of the Defence Minister, External Affairs Minister and National Security Advisor was set up.
- This Committee would authorise subsequent exports of major indigenous platforms to various countries. The Committee would also explore various available options including the Government-to-Government route
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