From Rs 1,521 Crore In FY17 To Rs 15,198 Crore In FY23, India’s Defence Exports Is Showing Promising Growth Prospects

India has begun new deal talks with Vietnam to sell the BrahMos missiles, a supersonic cruise missile. The BrahMos missile, which BrahMos Aerospace develops, is the fastest supersonic cruise missile in the world. 

According to reports, the current deal is potentially worth $ 625 million, while the last deal India signed with the Philippines was worth $325 million. 

While India is one of the largest importers of defence items, it has been working on increasing its share of the global defence export market.

For the financial year 2023 (FY23), India’s companies involved in the defence space have exported Rs 15,198 crore worth of defence-related products. In FY17, the country had exported only Rs 1,521 crore worth of defence exports. With this, the country has achieved more than half of its goal of Rs 25,000 crore in exports by 2025. 

The year 2022 was positive for the defence sector, with the $ 375 million India-Philipines BrahMos deal being signed along with the $ 155 million Kalyani Strategic Systems Limited’s supply of artillery systems to another country.

The indigenisation of Defence Products is Growing Rapidly

It is no longer a case of merely products being assembled in India, with parts manufactured elsewhere. Today, 70 per cent of the parts for a BrahMos missile are produced in India, compared to 15 per cent earlier. 

The light combat aircraft (LCA) Tejas, another product India is now pushing to export, has an indigenous content of 60 per cent by value and 75 per cent by volume. 

According to Hindustan Aeronautics Limited’s latest conference call with investors, the management announced that it was pursuing export opportunities with the Philippines, Argentina, Sri Lanka, Maldives, Botswana, Thailand and Nigeria for its fixed-wing LCa and rotary-wing helicopters. 

According to the company, the talks with Argentina and the Philippines are in the advanced stage. The initial orders are expected to be in the range of $ 150 million (Rs 1,200 crore) on the advanced light helicopter side. 

The government has said that the share of imported procurement has fallen from 46 per cent in FY19 to 36 per cent in FY22. 

Policy changes have also been introduced over the last several years to indigenize defence production with the launches of Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu. 

As of December 2022, agreements for investments worth Rs 24,000 crore were signed with different companies to set up units in the corridors. So far, companies have already made investments worth Rs 6,089 crore in these areas. 

India’s push for the indigenisation of defence products could help the nation in its bid to become a larger player in the space. With indigenisation, increased production by Indian defence production plants would create economies of scale, making the country’s defence exports more competitive in the global market.

India Could Benefit Immensely From Defence Exports

While several countries have expressed interest in India’s Tejas and BrahMos, India is targeting Africa and South East Asia as its export markets. Indian defence products are said to have a lower price tag compared to other products in the same class, with sound quality, making the products suitable for countries with smaller defence budgets. 

The current scenario could be an opportune time for India to supply to South-East Asian countries looking to increase their defence strength to protect their territory against China’s growing clout in the region. 

While these nations mainly import from larger exporters of defence, India’s share of their defence budgets could grow in the future.

Apart from the economic aspect, these defence deals are also expected to increase opportunities for increasing its clout in the region. 

There could be a potential sale of another $ 300 million worth of missiles to the Philippines in 2023. 

According to its latest conference call with investors, Bharat Forge, the owner of Kalyani Strategic Systems, expects to cross Rs 800 crore in turnover for FY24 and had an order book of Rs 2000 crore at the end of May. The company plans to triple its production in India by April 2024. 

While these numbers are small when compared to larger arms exporters, they point towards India’s increasing expertise in defence manufacturing.