Defence Exports – An Adjunct to India’s Foreign Policy

The Term

In general, the term ‘defence exports’ imply transfer of lethal weaponry and warlike equipment to another country under various parameters of mutual understanding and terms of exchange. Export of defence hardware is an adjunct to a government’s foreign policy, and a key exercise of national prerogative. Of course, at the execution end, this policy option is conditional to the foundations of the nation’s defence technology and competence of its defence industry. These three aspects are intrinsically inter-related.

This paper purports to explore the incumbent Indian government’s policy on defence exports during the decade gone by, as viewed through one of principal legatees of the extant policy – the nation’s military forces. Out of the vast inventories and articles of use in defence, the term here is focussed upon just the specifically war-dedicated ones.

The issue here is viewed from three angles: India’s post-independence stance on production and export of military hardware, a refreshing display of policy sanguinity in recent years, and the connotations thereof.

Significance of Defence Exports

Nations possessing a fairly competent defence industry take recourse to defence exports for varying combines of their statecraft - political goals, military alliances and profitable trade. Such exports are regulated by these nations’ domestic as well as collaborative production of war-like hardware as well as the needs of their politically friendly ‘entities’ – both state and non-state parties.^[1] Besides garnering political influence, many nations in possession of due military techno-industrial competence are motivated by the galloping global defence spendings to develop export-oriented military hardware as parts of their business dedicated enterprises. Of course, there are unintended fallouts of that option.^[2]

At the international level, defence exports policies are underpinned by varying combinations of intents and priorities and it includes the following.

1. To forge political and military partnerships with like-minded nations. The US, the EU, Russia and the UK are some prime examples who are driven by this intent.
2. To capture political and military dependencies with the purpose of spreading strategic influence. China, Russia, Türkiye and Iran are some ready examples.
3. Purely as stand-out trade and commercial enterprise to generate finances to fund defence research, technology upgrades and employment. France, Sweden, and Italy are some examples.

No doubt, there are instances of undesired side-effects of promoting defence export policies and many of these have been rather debilitating even to the exporters’ interests. Turning American guns on its allied Republicans during the Chinese Civil War and the Western Powers’ implicit weaponisation of the West Asian outlaws are some prime examples of that pitfall.

The Case of India

At the time of Independence, India maintained a modest defence industry that by and large met the country’s post-independence requirements of war-like stores and equipment. The country’s modest defence industry also enabled it to fulfil its formal security obligations towards Nepal and Bhutan.

Subsequently, as measures of her neighbourhood relations, India transferred limited amounts of weaponry and equipment to Myanmar, Sri Lanka, Maldives and Afghanistan. These transfers however, are not strictly exports but part of India’s broader defence diplomacy.

India’s national security policy until recently was marked by the country’s political leadership’s accommodation of adversarial intransigence in favour of ‘peace and friendliness.’ That idealism, however, was pushed so far as to foster a systemic disorientation when the term came to be underscored by smug repudiations of the factor of military heft in nation building. Stymieing of development of the nation’s defence industry in line with modernity was one of the most debilitating fatalities of that disorientated policy. Besides maintaining the military’s dated weapons and equipment inventory, India’s state-owned defence industry, modest and dated as it was in any case, was thus left bereft of user demand, industrial collaboration, global trade competition, and sustained in-house research. Modernisation of military hardware, and as a consequence that of the defence industry, remained capped thus. Indeed, that debility came to be reflected in our rather pacifist foreign policy articulations.

Matters improved only marginally following the 1962 Sino-Indian War and the 1965 Indo-Pakistan War. However, apart from the space and nuclear domains and certain specific items of licensed production, the extant fiscal squeeze continued to stifle procedural and technological modernisation of India’s indigenous defence industry. Besides, India’s ‘no defence exports’ policy further contributed to its defence industry stagnation.^[3] That scotched most possibilities of modernising India’s defence industry to meet her rising domestic and import requirements of the day, besides preventing any scope for development of export demands.^[4] That was a rare instance of a nation’s misconceived walk into a self-trap!

Reticence to Reality

The situation continued in India’s post-1990 period of fiscal emergency, and even after, till the 2014 Government took note of the harsh realities of neighbourhood belligerence. In keeping the national sovereignty secure from ruthless predators – both inimical and ‘friendly’ pretenders - the role of geopolitics of arms trade was also appreciated. Like many strategically conscious powers, India chose to boost defence production and open up its policy of defence exports in order to strengthen the country’s international diplomacy. Besides, the purpose was also to generate additional fundings for defence modernisation without compromising the other equally salient national obligations.^[5] India has also woken up to the reality of the lucrative global defence trade. For example, global defence exports reached USD 750 billion in 2022 and it was projected to grow to USD 1.38 trillion by 2030.^[6] The major exporters include the US, Russia, France, China, and Germany

Government’s Recent Policy Articulations

For a nation stagnating in defence technology, catching up with nearly a quarter century of lag is a complex task. That requires a sectoral elevation to high-grade technical competency, extraordinary levels of funding, long gestation periods, and above all, sustained political resolve. The most significant achievement of the two successive governments of the past decade therefore has been to rescue the indigenous defence industry from the state’s practically institutionalised apathy. Another landmark achievement, particularly related to national security, has been to espouse, and uphold, a robust foreign policy that is free from diplomatic reticence and undue political deference towards hostile forces.

Recent initiatives to galvanise India’s foreign relations through defence industrialisation and exports of defence hardware are as articulated in the Government’s recently promulgated ‘Strategy for Defence Exports.’^[7] Further, its ‘Defence Production & Export Promotion Policy’ (DPEPP) promotes the cause of defence research & development to the achievement of the goal of self-reliance.^[8] These policies are aimed at promoting the Government's 'Make In India' initiative and finding prominence among the international exporters of defence products. Future governments would do well to sustain the initiative.

Some of the landmark provisions enunciated by the incumbent government to promote Defence Exports are summarised below.

1. The Scheme of ‘Innovation for Defence Excellence’ (IDEX).
2. Promotion and coordination mechanism through appointment of a ‘Defence Exports Steering Committee’.
3. Promulgation of a ‘Positive Indigenisation List’ of 411 major military hardware (so far 4,666 items in all) to be freed of imports dependency.^[9]
4. Offers of financial and export facilitation supported by the issuance of ‘Lines of Credit’ to buyer nations and domestic private enterprises as well as startup ventures.

Promises of Resurgence in Defence Exports

Definite as well as expected gains from the new measures on defence exports may be envisaged as follows.

1. Incentivisation of domestic technological and industrial uplift by due harness of indigenous information technology, Micro, Small & Medium Enterprise (MSME) and start-up regimes;
2. Substitution of defence imports, improvement of foreign trade balance and generation of additional funds for accelerated military modernisation;
3. Promotion of strategic inter-dependencies through entry into global defence manufacture, supply chain and logistic ventures, and fostering military interoperability with strategic partners;
4. Boosting India’s influence and diplomatic leverage in the strategically critical Indo-Pacific Region.

The Government’s policy aims at defence exports of goods and services to the tune of Rs 35,000 crore by 2025 and Rs 50,000 crore by 2028-29.^[10]

Recent Status of Defence Exports

India’s defence exports are operative in over 75 nations. These include Italy, Russia, Maldives, Mauritius, Seychelles, Sri Lanka, Australia, Japan, Israel, Brazil, the United Arab Emirates (UAE), Egypt, Indonesia, Thailand, the US, the UK, France, and Armenia. The items are generally mid-technology ammunitions, missiles, rockets, torpedoes, artillery guns, drones, electronics, armoured vehicles, patrol boats, protective gear, radars and surveillance systems, and so on.^[11]

India today stands within the top 25 global defence exporters. In value terms, the surge is from Rs. 686 crores in 2013 to nearly Rs. 16,000 crores in 2023, the private sector being the major contributor. Inter alia, that would reflect on reduction of India’s dependency on defence imports. Scope for further enhancement is unlimited. Meanwhile, according to The Eurasian Times, Indian offers include the Akash air defence system, anti-submarine torpedoes and coastal radars to Vietnam, BrahMos cruise missiles and water weapons to the Philippines, BrahMos missiles to Egypt, and Pinaka rockets, anti-tank missiles and ammunition to Armenia – the list is not exhaustive. Interests in the indigenous Tejas Multirole Combat Jets and Light Combat Aircrafts have also been shown by the African, Middle Eastern and the South-East Asian nations.

Looking Ahead

As the new government assumes office, it would be enjoined to undertake a renewed thrust to secure the advantages of its past achievements. To that end, certain ruling imperatives for growth of defence exports are as enumerated below.

1. Further simplification of rules for industrialisation and defence imports and exports;
2. Collaboration, licensing and enhanced funding of the defence and academia sectors to boost scientific research and innovation;
3. Redressal of infrastructural and industrial deficits in the system, including the need for higher skill sets, to prevent delays in mission mode projects;
4. Impetus to the ‘Strategic Partnerships Model’ (enunciated in May 2017), to institutionalise defence production, and in consequence, defence exports.

We are on the cusp propagating a new, empowered India and a corresponding vitalisation of her foreign policy. As discussed in this paper, successful follow up of the achievements secured so far remains contingent on the following trinity of interconnected factors.

1. Attainment of higher grades of indigenous defence industrialisation;
2. Assimilation of latest defence technological developments;
3. Management of indigenous manufacture and balance between defence imports vis-a-vis defence exports;
4. Adoption of defence diplomacy as an intrinsic aspect of foreign policy.

Doubtlessly, these factors have to be exercised by a whole-of-the-government approach. That approach takes off from a robust foreign policy that helps sustain a new India’s targets of annual defence production at Rs 3 lakh crore and boosting of defence exports to Rs 50,000 crores. In so doing, the most prominent accomplishment of the two post-2014 governments has been to challenge the past foreign policy of undue reticence and chart new paths to a sovereignty-empowered, self-reliant and respected member of the global community of nations.

References

^[1] While China offers war-like hardware even to its favoured non-state entities (Cambodian and Myanmar insurgents, for example), many weapon producing nations (France, Germany, Sweden etc.) become unwilling or willing participants in the smuggling industry of sophisticated weaponry. A report on ‘growth of international grey arms market’ is indicative.
^[2] Türkiye, Iran, Sudan, Pakistan, Hamas and Houthi are known to develop indigenous military hardware like rockets, bombs, drones, targeting and communication equipment etc. purely for export to their partners. Refs: Trading Economics, https://tradingeconomics.com/turkey [3] /exports/israel/arms-ammunition-parts-accessories; Iran Watch, https://www. iranwatch.org / -irans-continuing-arms-transfers-yemen; Institute for Security & Development Policy, https://www.isdp.eu/revisiting-the-nuclear-nexus-between-pakistan-china-and-north-korea/ [4].
^[3] So much so that in early 1980s, political idealism caused a storm to be raised against disposal of India’s obsolescent T-54 tanks to South Africa citing it as violative of the Indian culture!
^[4] Even Nepal, our traditional recipient of defence material, had to look to the USA to meet its requirements of small arms.
^[5] Ministry of Defence, Modernisation of Armed Forces, Press Information Bureau, Delhi, Jul, 2022.
^[6] Trends in International Arms Transfers, SIPRI Factsheets, 2023, . .
^[7] Strategy for Defence Exports’, https://www.ddpmod.gov.in/default/files/ [5].
^[8] Defence Production & Export Promotion Policy, 2020 (DPEPP),
https://www.ddpmod.gov.in/sites/default/files [6].
^[9] Pant & Bommakanti, India’s Defence Exports: Continuing Defence Reforms is Critical, The Economic Times, Apr, 2024.
^[10] Hindustan Times, 16 Feb 2024; The Economic Times, 24 Feb 2024. ET Online, 25 Feb, 2024.
^[11] India’s defence exporters and manufacturers, https://dgqadefence.gov.in/defence-export-deps#:~:text=1 [7].

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