What explains the surge in India’s defence exports? Smarter policies, competitive products

Secondly, the MoD has issued an Open General Export License, which has significantly eased the flow of exports in three specific areas such as components and parts, Transfer of Technology and export of key weapons and platforms to select export destinations such as the US, the UK, South Africa, Belgium, Germany, Spain, Sweden, Poland, Japan, Mexico, Italy and France. The Open General Export License is a one-time clearance and valid for two years from the date of issue.

Consequently, a whole slew of exports has been made according to the MoD such as, “…Dornier 228 aircraft, 155mm Advanced Towed Artillery Guns (ATAGs), BrahMos cruise missiles, Akash Surface to Air Missile (SAMs) systems, Pinaka rockets and launchers, thermal imagers, body armours,…Line Replaceable Units (LRU) and parts and components and avionics and small arms. There is a growing global demand of LCA-Tejas, Light Combat Helicopters, aircraft carrier, MRO (Maintenance, Repair and Overhaul) activities etc.”

The outcome of these internal reforms has made it easier to conduct business through its approach of catalysing higher exports and making products highly attractive in the global arms market.

The BrahMos Breakthrough

The third key factor, which is little known, yet vitally notable, is the competitiveness of specific Indian weapons systems, which has rendered them more export worthy. Take the BrahMos cruise missile, which travels at supersonic speeds, that is a joint venture between Russia and India.

The JV called BrahMos Aerospace was set up in 1998 resulting in a cruise missile co-developed by New Delhi and Moscow. Following extensive and rigorous testing, the Indian armed services have inducted variants of the missile. The supersonic cruise missile was sold to the Philippines as part of a contract signed in January 2022 to meet its coastal defence needs for a price of $375 million.

Indeed, this sale alone accounts for roughly one quarter of India’s total defence exports. What explains the missile’s overseas sales? Indian technology firms such as Data Patterns Limited (DPL) have developed low-cost parts also known as Check Out-Equipment (COE) that have served as replacements for more expensive foreign origin parts in the BrahMos missile system.

An estimated 75 percent of savings in direct costs accrued as a result of native manufacture of COE by DPL. Consequently, the BrahMos missile has seen its cost decline making the cruise missile highly competitive in the international defence export market. In addition, prior to the cruise missile’s sale to Manila, the Indian armed services had already tested, integrated and deployed the missile, significantly enhancing the exportability of the missile to foreign buyers. Vietnam could be the next buyer of the BrahMos.

A Note Of Caution

Cumulatively, all the factors listed above have boosted exports from a low base in 2016-17 to a  high growth plane in 2022-23. Nevertheless, a word of caution is necessary. The recent decision by Ecuador to scrap a contract following four crashes of the Dhruv Advanced Light Helicopters (ALH) developed and manufactured by the Hindustan Aeronautical Limited (HAL) for poor mechanical performance and product support is a serious setback, despite the extensive use of the ALH by the Indian armed services.

This episode may have weighed, albeit circumstantially or incidentally, on Malaysia’s decision not to pick the HAL developed Tejas Light Combat Aircraft (LCA) and instead select South Korea’s Korea Aerospace Industries (KAI) built FA-50.

The latter aircraft as opposed to the Tejas had the advantage of being able to integrate both Western and Russian origin weapons and importantly product support and training, which in all probability influenced Kuala Lumpur’s decision to choose the FA-50. Further, despite the noteworthy export performance in 2022-23, New Delhi still imported $24 billion worth of equipment during the last five years making it the largest importer of military equipment in the world.

This should not serve as a dampener, but spur Indian industry and the government to strive for the better performance of exports in the coming months and years.

Kartik Bommakanti is a Senior Fellow with the Strategic Studies Programme at the Observer Research Foundation, New Delhi. Views are personal and do not represent the stand of this publication.