When Prime Minister Modi, in his Republic Day address from the ramparts of the Red Fort, on 15 August 2020 reiterated the requirement of being Atmanirbhar, it was more importantly a message to the world unequivocally clarified that Atmanirbharbharat is not about closing doors but opening gates for the world to use India as their profitable production base. This was the essence of his belief and strong message to the best companies in the world to COME, Make in India. If we rewind back to Prime Minister Modi speech at the same venue in 2014, there is a clear sense of deja vu. Even then, Prime Minister Modi announced Submarine se Satellite tak Come, Make in India. Unfortunately the narrative developed into a swadeshikarn of Make in India which forgot the quaifier COME as a sort of capitulation, Its not and Prime Minister Modi clearly understood that its not technology or FDI or capability etc its only about JOBS for the 65% population of India, This would keep them engaged and away from trouble.
In recent years, India announced a defence export strategy, a restritictive list of imports and a string of incentives to facilitate exports of military hardware including weapons, platforms and systems and their parts. The “Export Booklet” has listed weapons and Systems under five broad categories, Land Systems, Naval Systems, Air Systems, Communication Systems and Other Systems and their sub-systems. The banned list comprises 101 platforms, equipment and systems thatmust be procured domestically. This does not, I will say this with emphasis, disallow foreign companies to set up production in India in accordance with possibly the world’s most liberal FDI policy, This is very significant, Whilst there is no argument that domestic companies must grow the stronger argument is that India needs Jobs, Jobs and more Jobs. these wont come from domestic demand only. The present recalibration after China’s complicity in triggering a global crisis of pandemic proportions, its lax IP regimes, its approach to Hongkong and Taiwan etc gives India a Fabulous opportunity to displace China as the future secure, transparent and fair partner of choice to the world.Aerospace, Maritime, Defence and Military offers a huge opportunity for savvy companies.
Defence exports have surged in the last three years from Rs 4682 crores in 2017-18 to Rs 8320.09 crores in 2018-19 and Rs 8595.47 crores in 2019-20 which amounts to less than 0.5% of total exports. Interestingly, only about Rs 800 crores has been exported by the DPSU/OFBs and the balance by the private sector. The target for 2020-21 is Rs. 15,000 crores. In effect, given India’s very robust A&D industrial capacity resident in the DPSUs, OFBs and the private sector Indian defence exports could and should do much better with a dedicated Government support.
In order to enter the Global Arms trade as an important player in the highly specialized and technology driven defence ecosystem, India needs to develop smart strategies to energise its defence exports. Such a strategy should include, at one level, niche platforms and systems directed towards well identified target countries, various promotional mechanisms through offsets, counter trade options. At another level India’s highly innovative and talented MSMEs have to ramp up quality, quantity and value to become Tierised suppliers of choice to Foreign OEMs. At yet another level, India as the defacto net security provider in the IOR, could provide diplomatic support to promote defence exports to friendly foreign countries to help build local capability against terrorism, piracy, illegal trade and trafficking, resource protection etc. using Indian built platforms and systems.
To develop Strategies and identify specific interventions for promotion of defence exports a concerted effort at creating a practical, feasible and realistic road map is urgently required so that defence exports of US S$5 bn is achived by by 2025. Several issues and concerns need to be addressed before chartimg the way forward. These include seeking solutions from Government, Services and Industry to –
- How can the SMEs join the global supply chain- challenges and opportunities?
- What role and responsibilities can we assign our Embassies to promote Indian A&D industry? Do we need a separate Office of Defence Cooperation?
- Why are we not able to export premium world class Indian systems and platforms – such as Akash SAM, OPVs, BrahMos, HTT40, LCH and so on?
- How can the MEA work with MoD and MOCI/MoF to facilitate exports?
- How can we increase the DPSU contribution to defence exports, on which supply chain many MSMEs can prosper, from about Rs 800 crs in 2018-19 to Rs 8000 crores
To deliberate these matters SAMDeS invites its fraternity to suggest the Way Forward,