India’s Defence Exports reaches all-time high | UPSC

India’s defence exports reached a staggering Rs 21,083 crore in the financial year 2023-24, marking a 32.5% increase from the previous fiscal year.

Staggering Growth in Defence Exports:

• India’s defence exports have soared, with figures indicating a 31-fold increase over the past decade, compared to the financial year 2013-14.
• Comparing data from two decades – 2004-05 to 2013-14 and 2014-15 to 2023-24 – reveals a 21-fold growth in defense exports.
  • From 2004-05 to 2013-14, they totaled ₹4,312 crore, while from 2014-15 to 2023-24, they increased to ₹88,319 crore.

Contributors to Export Growth:

• The private sector and Defence Public Sector Undertakings (DPSUs) have played pivotal roles in this growth, contributing approximately 60% and 40%, respectively.
• The number of export authorizations issued to defence exporters also witnessed a notable increase from 1,414 in FY 2022-23 to 1,507 in FY 2023-24.

Expansion and Future Targets:

•  India has set an ambitious goal of reaching Rs 35,000 crore in annual defence exports by 2024-25
• Defence Minister anticipates exports to reach Rs 50,000 crore and annual production to hit Rs 3 lakh crore by FY 2028-2029.

Defence Imports by India:

• India has made efforts to reduce its dependence on defense imports, but it still holds the title of the world’s largest arms importer.
• According to the latest report by the Stockholm International Peace Research Institute (SIPRI), India accounted for 9.8% of the total global defense imports between 2019 and 2023.
• India’s arms imports during the period of 2019-23 increased by 4.7% compared to the period of 2014-18.

Significance of growth in defence exports:

• Leads to development and improvement of countries own industrial and technological capabilities to produce essential defense equipment and systems.
• Encourages self-reliance in India’s defense sector.
• Integrating with the defense value chain through exports to major countries can significantly enhance India’s defense industry and global presence.

Challenges in defence exports:

• Regulatory Complexity: India faces challenges with complex regulatory frameworks involving multiple government agencies, leading to delays in export clearances that hinder global competitiveness.
• Perception of Product Quality: India’s historical inconsistency in defence product quality perception deters international buyers, impacting its global appeal.
• Geopolitical Considerations: India faces the challenge of balancing strategic partnerships and expanding export markets amidst dynamic geopolitical landscapes.
  • Geopolitical factors heavily influence export decisions, necessitating adept diplomacy and foresight.

Initiatives to promote defence exports:

• Prioritization of procurement from domestic sources under Defence Acquisition Procedure (DAP)-2020.
• Liberalization of Foreign Direct Investment (FDI) policy, allowing 74% FDI under automatic route.
• Launch of Mission DefSpace and Innovations for Defence Excellence (iDEX) scheme.
• Establishing Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu, to attract investments and create a comprehensive defense manufacturing ecosystem.
• The DEPC (Defense Export Promotion Council) Scheme, launched in October 2018, aims to promote the government’s “Make In India” initiative.
• Positive Indigenization Lists comprise four defense equipment and platforms for which there would be an embargo on imports.

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