India wants to double defence exports over the next five years, Prime Minister Narendra Modi said 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 defence products. We have taken measures to change it since 2014,” Modi said in Lucknow, addressing the inaugural ceremony of India’s 11th defence expo.
“Our aim is to increase exports of defence products to five billion dollars in five years,” Modi said, adding India exports about 170 billion rupees ($2.4 billion) of defence products.
India’s defence export ambitions are soaring as Asia’s third largest economy suffers its worst slowdown in decades with economic growth dropping to 4.5% in July-September quarter – the 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 top suppliers.
According to government data, India’s major defence export customers include Italy, Sri Lanka, Russia and France.
Exports, primarily by government ordnance factories and private firms including L&T, Bharat Forge and Tata group, are mainly offshore patrol vessels, helicopters, coastal surveillance systems and radar spares.
India’s armed forces, saddled with outdated aircraft and warships, need funds for modernisation.
With government possibly set to break its own fiscal deficit target due to slowing growth, funds allocated for modernisation are barely enough, experts said.
Laxman Behera, research fellow at the Institute for Defence Studies and Analyses, said in a report India’s defence resource crunch was acute in recent years.
India’s budget for modernisation 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 meagre hike of 2.55 billion rupees over revised estimates of last year’s budget, Laxman called funding for the country’s military “grossly under-provisioned.”
US ambassador to India Kenneth Juster said lower offset obligations, a mandatory financial commitment locally by firms partnering with India and less regulation can help India bring in billions of dollars in foreign investment.