India aims to double defence exports in five years amid resource crunch

Reuters Lucknow, Uttar Pradesh Feb 10, 2020, 06.52 PM(IST)

An Indian Air Force personnel arranges ammunitions in front of MIG-21 fighter plane at DefExpo 2020 in Lucknow, February 5, 2020. Photograph:( Reuters )

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Between 2013 and 2017, India was the world's top arms importer, accounting for 12 per cent of total imports globally, with Russia, Israel and the United States among the top suppliers.

India wants to double defence exports over the next five years, Prime Minister Narendra Modi said on Wednesday, as the country seeks to cut its import bill amid a funding crunch that has forced successive governments to go slow on new orders.

"For several years India has been a net importer of defence products. We have taken measures to change it since 2014," Modi said in the city of Lucknow, addressing the inaugural ceremony of India's 11th defence expo.

"Our aim is to increase exports of defence products to five billion dollars in five years," Modi said, adding India exports about 170 billion rupees ($2.4 billion) of defence products.

India's defence export ambitions are soaring as Asia's third-largest economy suffers its worst slowdown in decades with the country's economic growth dropping to 4.5 per cent in July-September quarter – its lowest quarterly growth in six years.

Between 2013 and 2017, India was the world's top arms importer, accounting for 12 per cent of total imports globally, with Russia, Israel and the United States among the top suppliers.

According to government data, India's major defence export customers include Italy, Sri Lanka, Russia and France.

The exports, primarily made by government ordnance factories and private firms such as L&T, Bharat Forge and Tata group, including offshore patrol vessels, helicopters, coastal surveillance systems and spares for radar.

India's armed forces, saddled with outdated aircraft and warships, are in dire need of funds for modernisation.

However, with the government possibly set to break its own fiscal deficit target due to slowing growth, funds allocated for modernisation have been barely enough, experts have said.

Laxman Behera, research fellow at Institute for Defence Studies and Analyses, said in a report released on Tuesday that India's defence resource crunch had been acute in recent years.

India's budget for modernisation of weapons, aircraft and warships announced by Finance Minister Nirmala Sitharaman last week stood at 906 billion rupees, out of a total allocated defence budget of 3,230.5 billion rupees.

With a meagre hike of 2.55 billion rupees over the revised estimates of last year's budget, said Laxman from IDSA called funding for the country's military "grossly under-provisioned."

US ambassador to India Kenneth Juster said lower offset obligations, a mandatory financial commitment locally by global firms partnering with India and less regulations can help India bring in billions of dollars in foreign investment.