POINT IAS

Defense Export/Import

Practice Questions:

  1. What steps have been taken by the government of India to streamline the process of defense procurement in India? – 150 words
  2. The defense manufacturing sector in India has a huge export potential. Do you agree? Highlight the advantages of the effective utilization of India’s defense export potential. – 250 words.
  • Stockholm International Peace Research Institute (SIPRI) in the period between 2009-13 and 2014-18, Indian defence imports fell even as exports increased.
  • Reasons for this change – ‘Make in India’; absence of capabilities/delays in supplying equipment by vendors & the cancellation/diminution of existing contracts by the Indian government.
  • Steps taken to streamline defence procurement – Formulating India’s Defence Procurement Procedure (DPP) – it lays out the terms, regulations and requirements for defence acquisitions; creation of a new procurement category in the revised DPP of 2016 dubbed ‘Buy Indian Indigenously Designed, Developed and Manufactured’ (IDDM);  introduction of provisions in the DPP that make private industry production agencies and partners for technology transfers. 
  • According to government of India data for the financial year 2018-19, the three armed services for their combined capital and revenue expenditures sourced 54% of their defence equipment from Indian industry.
  • Among arms producers, India has four companies among the top 100 biggest arms producers of the world.
  • Challenges SMEs face in defence manufacturing – privilege Defence Public Sector Units (DPSUs) over the private sector; not enough incentives in terms of technology and finance. 
  • In the last two fiscal years, 2017-18 and 2018-19, exports have witnessed a surge from ₹7,500 crore to ₹11,000 crore, representing a 40% increase in exports.
  • Why exports have risen – delisting or removal of several products that were restricted from exports; dispensation of the erstwhile No Objection Certificate (NOC) under the DPP restricting exports of aerospace products.
  • Indian defence exports, while showing a promising upward trend, still remain non competitive globally. It is likely that Indian defence exports will take several years before they are considered attractive by external buyers. But green shoots are emerging in the sector.
  • Tapping the defense sector for exports effectively can be a great source of foreign exchange and can provide huge employment opportunities in the SME sector.
  • Small and Medium Enterprises (SMEs) until 2016 accounted for a 17.5% share of the Indian defence market.

Source: https://www.thehindu.com/opinion/lead/still-no-bullseye-in-volume-and-value/article31230343.ece

Categories: POINT IAS

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