Republic Day celebration in India gives a sneak preview of our formidable defense capabilities with over 1.5 million active personnel which is 2nd largest in the world and an estimated spend of USD 66 billion which is 3rd highest in the world after China and USA.
This necessitates strengthening of the domestic defence industry,80% of which is government owned public sector including DRDO and its 50 labs, 4 defence shipyards, 5 defence PSUs and 41 ordnance factories.
The 2020 Defence Manufacturing Policy is a step towards reducing the imports and enhance domestic manufacturing. Defence Production Policy of 2018 (DPrP-2018) has a goal of becoming among the top 5 global producers of the aerospace and defence manufacturing with annual export target of US$5 billion by 2025. This has resulted in India figuring on a list of global arms exporters, making a modest entry at number 23 and the ranking is likely to rise sharply over the coming years with the government’s focus on encouraging weapons sales abroad. India is the second largest defence importer of defence products behind Saudi Arabia making up 9.2% of global arms import which has come down significantly (by 32%) since 2015, indicating the effectiveness of the policy.
About 50 Indian companies in the private sector have contributed to defence exports. Some of the major export destinations for defence products have been Italy, Maldives, Sri Lanka, Russia, France, Nepal, Mauritius, Sri Lanka, Israel, Egypt, UAE, Bhutan, Ethiopia, Saudi Arabia, Philippines, Poland, Spain and Chile etc. The major defence items being exported are Personal Protective items, Offshore Patrol Vessels, ALH Helicopter, SU Avionics, Bharati Radio, Coastal Surveillance Systems, Kavach MoD II Launcher and FCS, Spares for Radar, Electronic System and Light Engineering Mechanical Parts etc.
Indian defence product exports to Australia included cartridges, while it exported protective headgear and hard armour plates to Azerbaijan, helmets, bomb suppression blanket and soft armour panels to Germany, sleeping bags to Guinea, mortar shell covers to Israel, hard armour plates to the Netherlands and the US, radar parts, bullet proof vests and helmets with accessories to Singapore, detonators to South Africa and night vision binoculars to Thailand and exports to Qatar, Lebanon, Iraq, Ecuador, Uruguay, Japan & Egypt primarily comprised body protecting equipment.
In terms of manufacturing investment 100% FDI is allowed in Defence industry; wherein 49% is allowed under automatic route and beyond 49% through Government route. The indigenous production of defence electronics is picking up momentum with the DPSUs and private sector companies are seen to be setting up their units for manufacturing defence electronics and communication. Reliance, Tata Power SED, L&T, and Mahindra Aerospace are some of the private companies that are investing big in this sector.
Going forward the electronics systems will form an integral part of almost all defense systems and are built into nearly every weapon system providing capabilities that are critical to defense requirements optimizing the effectiveness and lethality of weapons systems. At higher level, avionics, airborne systems, military communication systems, UAVs, land system electronics, naval system electronics, electronic warfare systems, C4ISR and weapon and missile system electronics are emerging as key focus area for the defense electronics industry.