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India Aims to Double Defense Exports in 5 Yrs Amid Resource Crunch

Indian Air Force Mirage fighters perform at the DefExpo in Lucknow, India, Feb. 5, 2020.

India wants to double defense exports over the next five years, Prime Minister Narendra Modi said on Wednesday, as the country seeks to cut its import bill amid a funding crunch that has forced successive governments to go slow on new orders.

"For several years India has been a net importer of defense products. We have taken measures to change it since 2014," Modi said in the northern city of Lucknow, addressing the inaugural ceremony of India's 11th defense expo.

"Our aim is to increase exports of defense products to five billion dollars in five years," Modi said, adding India exports about 170 billion rupees ($2.4 billion) of defense products. India's defense export ambitions are soaring as Asia's third largest economy suffers its worst slowdown in decades with the country's economic growth dropping to 4.5% in July-September quarter – its lowest quarterly growth in six years.

Between 2013 and 2017, India was the world's top arms importer, accounting for 12% of total imports globally, with Russia, Israel and the United States among the top suppliers.
According to government data, India's major defense export customers include Italy, Sri Lanka, Russia and France.

The exports, primarily made by government ordnance factories and private firms such as L&T, Bharat Forge and Tata group, include offshore patrol vessels, helicopters, coastal surveillance systems and spares for radar.

India's armed forces, saddled with outdated aircraft and warships, are in dire need of funds for modernization.

However, with the government possibly set to break its own fiscal deficit target due to slowing growth, funds allocated for modernization have been barely enough, experts have said. Laxman Behera, research fellow at Institute for Defense Studies and Analyses, said in a report released on Tuesday that India's defense resource crunch had been acute in recent years.

India's budget for modernization of weapons, aircraft and warships announced by Finance Minister Nirmala Sitharaman last week stood at 906 billion rupees, out of a total allocated defense budget of 3,230.5 billion rupees.

With a meager hike of 2.55 billion rupees over the revised estimates of last year's budget, said Laxman from IDSA called funding for the country's military "grossly under-provisioned."

U.S. ambassador to India Kenneth Juster said lower offset obligations, a mandatory financial commitment locally by global firms partnering with India and less regulations can help India bring in billions of dollars in foreign investment.