Aerospace & Defence exports is one of the most underreported sectors of the Indian economy India is one of the largest arms importers in the world, accounting for nearly 10 percent of the total global arms imports. This makes India the second largest arms importer in the world. It is still early days but India is slowly stepping up it’s defense exports. The Indian government has been running several ambitious initiatives to boost defense exports, and they’re starting to show results now.
In the last three years, India’s defense exports have doubled every year. In the 2016-17 financial year, India’s defense exports were valued at $200M. As of this year, the value stands at almost $1.5B.
The biggest contributor to India’s defense exports is America, followed by Israel and the European Union. The Indian government has big plans for defense exports as part of the defense production policy. Last year, New Delhi set an export target of $5B crores by 2025.
India is targeting as many as 85 countries to promote its defense manufacturing. This list includes countries like Vietnam, Thailand, Bahrain, Bangladesh, Afghanistan, the UAE, Saudi Arabia, and Malaysia. The Modi government has brought in a major shift in strategy to boost defense exports. A big part of this new approach is extending lines of credit for defense. So far, India has granted as much as 1.5 billion dollars as lines of credit to friendly countries only in the area of defense. This is to enable these countries and other allies to buy Indian defense equipment a line of credit- basically like a soft loan that allows a country to borrow up to a specified amount of defense equipment.
Under the make in india initiative, the government has promoted the private sector and startups in defense manufacturing. The aim is not only to build manufacturing capacity, but also to achieve technological competency. To accelerate domestic defense industrialization the government is trying to initiate flagship defense technology development programs which will cater to future defense acquisitions. These flagship programs will be based on existing competencies such as information technology. India already has like-minded diplomatic partners in the field of defense technologies- the United States Japan and Israel. With these countries India has initiated multiple projects to co-develop and co-produce defense technologies. This Will be expanded in scope to include partners like Australia and technologies like additive manufacturing or 3d printing which has begun to be used in the production of civil and military aerospace and naval systems components.
One existing opportunity which has emerged is the entry of startups in this sector. Currently there are several startups which are engaged in developing new prototypes products and technologies for the Indian military. The government has also launched IDEX or the innovations in defense excellence program which works with the research and development institutions, academia, industry and more importantly, startups to innovate solutions for the Indian military The program is being managed by the defense innovation organization or the DIO. The IDEX has identified several technologies which will augment the operational and combat capabilities of the indian military. These include the soldier protection systems secure hardware encryption devices gps anti-gem devices unmanned and underwater drones and 4g or lte tactical local area networks among many others. The example of IDEX shows that beyond the obvious market for the defense forces the innovation ecosystem and startups can unlock huge homeland security market not just in india but also other markets abroad.