19-Dec-2022: Status of Country's Defence Exports

Department of Defence Production issues authorisation for export of Munitions List items covered in Category 6 of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET). At present, the exports are being made to more than 75 countries all over the world. Names of the countries cannot be divulged due to strategic reasons. Based on the value of Export Authorization issued by DDP to Private companies and actual export/contract done by DPSUs/OFB, the export value during the last three years is as under:

To foster defence manufacturing ecosystem in the country, the Government has taken several policy initiatives in the past few years and brought in reforms to encourage indigenous design, development and manufacture of defence equipment, thereby promoting self-reliance in defence manufacturing & technology in the country. These initiatives, inter-alia, include according priority to procurement of capital items falling in Buy Indian (IDDM) Category from domestic sources under Defence Acquisition Procedure (DAP)-2020; Notification of  four ‘Positive Indigenization Lists’ of total 411 items of Services and  three ‘Positive Indigenization Lists’ of total 3,738 items  of Defence Public Sector Undertakings(DPSUs), for which there would be an embargo on the import beyond the timelines indicated against them; Simplification of Industrial licensing process with longer validity period;  Rationalised Defence Product List which required Industry License; Liberalization of Foreign Direct Investment(FDI) policy allowing 74% FDI under automatic route; Simplification of Make Procedure; Launch of Mission DefSpace; Launch of Innovations for Defence Excellence (iDEX) scheme involving Start-ups & Micro, Small and Medium Enterprises (MSMEs); Implementation of  Public Procurement (Preference to Make in India) Order 2017; Launch of an indigenization portal namely SRIJAN to facilitate indigenisation by Indian Industry including MSMEs; Reforms in Offset policy with thrust on attracting investment and Transfer of Technology for Defence manufacturing by assigning higher multipliers; and Establishment of two Defence Industrial Corridors, one each in Uttar Pradesh and Tamil Nadu; Earmarking of 25% defence R&D Budget for industry led R&D; and Progressive increase in allocation of Defence Budget of military modernization for procurement from domestic sources.

Government has brought in various reforms including ease of doing business to achieve the target of US $5 billion for defence exports by 2024-25 and to boost Defence exports.  

• Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) Category 6 titled ‘Munitions List’ that was hitherto ‘Reserved’ has been populated and Military Stores list notified vide Notification No.115(RE-2013)/2009-2014 dated 13th March 2015 stands rescinded.
• The Director General of Foreign Trade (DGFT) vide Public Notice No. 4/2015-20 dated 24th April, 2017 has delegated its authority and notified Department of Defence Production (DDP) as the Licensing Authority for export items in Category 6 of SCOMET. The export of items specified in Category 6 (Munitions List) except those covered under Notes 2 & 3 of Commodity Identification Note (CIN) of the SCOMET is now governed by the Standard Operating Procedure issued by the Department of Defence Production (DDP), Ministry of Defence.
• Standard Operating Procedure (SOP) for the export of munitions list items have been simplified and placed on the website of the DDP.
• A completely end-to-end online portal for receiving and processing export authorisation permission has been developed. The applications submitted on this portal are digitally signed and the authorisation are also issued digitally, at faster pace.
• In repeat orders of same product to the same entity, consultation process has been done away with and permission is issued immediately. For the repeat order of same product to different entity, the consultation earlier done with all stakeholders is now limited only with MEA.
•  In Intra-Company business (which is especially relevant for outsourcing of work by defence related parent company abroad to its subsidiary in India), the earlier requirement of getting End User Certificate (EUC) from the Government of importing country has been done away with and ‘Buying’ Company is authorized to issue the EUC.
• The requirement of Government signed EUC in cases of providing engineering services (ToT related to Munitions List) to Wassenaar Arrangement (WA) Countries has been dispensed with.
• Legitimate export of systems/platforms for civil end use to WA Member countries is considered subject to submission of EUC or import certificate or equivalent document issued by the Government of importing country.
• The legitimate export of the parts and components for civil use are now being permitted to WA Countries after prior consultation with MEA.
• For export of items for exhibition purposes, the requirement of consultation with stakeholders has been done away with (except for select countries).
• Powers have been delegated to DRDO and CMDs of DPSUs for exploring export opportunities and participation in global tenders.
• New simplified End User Certificate Format for Parts & Components has been provided in SOP.
• Validity of Export Authorization for export of parts & components has been increased from 02 years to date of completion of order/component whichever is later.
• A new provision for re-exporting parts and components for undertaking repair or rework to provide replacement for a component under warranty obligation is inserted in the SOP as a sub-classification of repeat orders.
• MHA vide Notification dated 1.11.2018 has delegated its powers to Department of Defence of Production to issue export license under Arms Rules 2016 in Form X-A, for parts & components of small arms. With this, the Department of Defence Production becomes the single point of contact for exporter for export of parts and components of Small Arms & Ammunitions.
• The Government has notified the Open General Export License (OGEL) – one-time export license, which permits the industry to export specified items to specified destinations, enumerated in the OGEL, without seeking export authorisation during the validity of the OGEL. OGEL has been integrated with end to end online Portal.
• Scheme for Promotion of Defence Exports has been notified to provide an opportunity to the prospective exporters an option to get their product certified by the Government and provides access to the testing infrastructure of Ministry of Defence for initial validation of the product and its subsequent field trials. The certificate can be produced by the prospective exporter for marketing their products suitably in the global market.
• A separate Cell has been formed in the Department of Defence Production to co-ordinate and follow up on export related action including enquiries received from various countries, sharing the leads with private sector & public sector companies and facilitate exports.
• In order to boost defence exports, regular webinars are organized with Friendly Foreign Countries (FFCs) under the aegis of DDP, MoD through Indian Mission abroad and Industry Associations with active participation from Indian Defence Industries.
• A Scheme to provide financial support to Defence Attaches for taking up actions for promoting Indian defence exports of both public and private sector in the countries to which they are attached, has been notified.
• A High-Level Committee (HLC) has been constituted under the Chairmanship of Raksha Mantri to facilitate faster clearances to export of major indigenous defence platforms to Friendly Foreign Countries.

1-Aug-2022: Defence Exports

The value of defence exports during the financial year 2021-22 has been Rs 12,815 crore. Authorisations were issued for export of SCOMET Category-6 items to about 61 countries during the year 2021-22. However, names of countries cannot be divulged due to strategic reasons. The year-wise value of defence exports since 2018-19 to 2022-23 (till June, 2022) is as under:

    *provisional

25-Mar-2022: Export of defence equipment

Since 2014 till date, the value of Defence Exports of India has grown approximately by six times. The year-wise details of value of exports are as follows: 

(Rs in crore)

The details of items cannot be shared in the interest of national security. 

Further, during the period, many reforms/steps have been taken up by the Government to boost Defence exports and enhance ease of doing business. These are as follows: 

• Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) Category 6 titled “Munitions List” that was hitherto “Reserved” has been populated and Military Stores list notified vide Notification No.115(RE-2013)/2009-2014 dated 13th March 2015 stands rescinded.
• The Director General of Foreign Trade (DGFT) vide Public Notice No. 4/2015-20 dated 24th April, 2017 has delegated its authority and notified Department of Defence Production(DDP) as the Licensing Authority for export items in Category 6 of SCOMET. The export of items specified in Category 6 (Munitions List) except those covered under Notes 2 & 3 of Commodity Identification Note (CIN) of the SCOMET is now governed by the Standard Operating Procedure issued by the Department of Defence Production (DDP), Ministry of Defence.
• Standard Operating Procedure (SOP) for the export of munitions list items have been simplified and placed on the website of the DDP.
• A completely end-to-end online portal for receiving and processing export authorisation permission has been developed. The applications submitted on this portal are digitally signed and the authorisation are also issued digitally, at faster pace.
• In repeat orders of same product to the same entity, consultation process has been done away with and permission is issued immediately. For the repeat order of same product to different entity, the consultation earlier done with all stakeholders is now limited only with MEA.
• In Intra-Company business (which is especially relevant for outsourcing of work by defence related parent company abroad to its subsidiary in India), the earlier requirement of getting End User Certificate (EUC) from the Government of importing country has been done away with and ‘Buying’ Company is authorized to issue the EUC.
• The requirement of Government signed EUC in cases of providing engineering services (ToT related to Munitions List) to Wassenaar Arrangement (WA) Countries has been dispensed with.
• Legitimate export of systems/platforms for civil end use to WA Member countries is considered subject to submission of EUC or import certificate or equivalent document issued by the Government of importing country.
• The legitimate export of the parts and components of small arms and body armour for civil use are now being permitted after prior consultation with MEA.
• For export of items for exhibition purposes, the requirement of consultation with stakeholders has been done away with (except for select countries).
• Powers have been delegated to DRDO and CMDs of DPSUs for exploring export opportunities and participation in global tenders.
• New simplified End User Certificate Format for Parts & Components has been provided in SOP.
• Validity of Export Authorization for export of Parts & Components has been increased from 02 years to date of completion of order/component whichever is later.
• A new provision for re-exporting parts and components for undertaking repair or rework to provide replacement for a component under warranty obligation is inserted in the SOP as a sub-classification of repeat orders.
• MHA vide Notification dated 01.11.2018 has delegated its powers to Department of Defence Production to issue export license under Arms Rules 2016 in Form X-A, for parts & components of small arms. With this the Department of Defence Production becomes the single point of contact for exporter for export of parts and components of Small Arms & Ammunitions.
• The Government has notified the Open General Export License (OGEL) -  one time export license, which permits the industry to export specified items to specified destinations, enumerated in the OGEL, without seeking export authorisation during the validity of the OGEL. OGEL has been integrated with end to end online Portal.
• Scheme for Promotion of Defence Exports has been notified to provide an opportunity to the prospective exporters an option to get their product certified by the Govt. and provides access to the testing infrastructure of Ministry of Defence for initial validation of the product and its subsequent field trials. The certificate can be produced by the prospective exporter for marketing their products suitably in the global market.
• A separate Cell has been formed in the Department of Defence Production to co-ordinate and follow up on export related action including enquiries received from various countries, sharing the leads with private sector & public sector companies and facilitate exports.
• In order to boost defence exports, regular webinars are being organized with Friendly Foreign Countries (FFCs) under the aegis of DDP, MoD through Indian Missions abroad and Industry Associations with active participation from Indian Defence Industries.
• A Scheme to provide financial support to Defence Attaches for taking up actions for promoting exports of India made defence products both of public and private sector in the countries to which they are attached has been notified.
• To enhance functional autonomy, efficiency and unleash new growth potential and innovation in Ordnance Factories, the Government has corporatized 41 Ordnance Factories into seven Defence Public Sector Units (DPSUs), 100% Government owned corporate entity (ies).

10-Dec-2021: Export of defence equipment

Since 2016-17 to 2018-19, the Defence Exports increased by almost seven times. The details of exports of last five years are as follows:

Many reforms/steps have been taken to boost Defence exports and bring ease of doing business in recent times. There are:

1. Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) Category 6 titled “Munitions List” that was hitherto “Reserved” has been populated and Military Stores list notified vide Notification No.115(RE-2013)/2009-2014 dated 13th March 2015 stands rescinded.
2. The Director General of Foreign Trade (DGFT) vide Public Notice No. 4/2015-20 dated 24th April, 2017 has delegated its authority and notified Department of Defence Production (DDP) as the Licensing Authority for export items in Category 6 of SCOMET. The export of items specified in Category 6 (Munitions List) except those covered under Notes 2 & 3 of Commodity Identification Note (CIN) of the SCOMET is now governed by the Standard Operating Procedure issued by the Department of Defence Production (DDP), Ministry of Defence.
3. Standard Operating Procedure (SOP) for the export of munitions list items have been simplified and placed on the website of the DDP.
4. A completely end-to-end online portal for receiving and processing export authorisation permission has been developed. The applications submitted on this portal are digitally signed and the authorisation are also issued digitally, at faster pace.
5. In repeat orders of same product to the same entity, consultation process has been done away with and permission is issued immediately. For the repeat order of same product to different entity, the consultation earlier done with all stakeholders is now limited only with MEA.
6.  In Intra-Company business (which is especially relevant for outsourcing of work by defence related parent company abroad to its subsidiary in India), the earlier requirement of getting End User Certificate (EUC) from the Government of importing country has been done away with and ‘Buying’ Company is authorized to issue the EUC.
7. The requirement of Government signed EUC in cases of providing engineering services (ToT related to Munitions List) to Wassenaar Arrangement (WA) Countries has been dispensed with.
8. Legitimate export of systems/platforms for civil end use to WA Member countries is considered subject to submission of EUC or import certificate or equivalent document issued by the Government of importing country.
9. The legitimate export of the parts and components of small arms and body armour for civil use are now being permitted after prior consultation with MEA.
10. For export of items for exhibition purposes, the requirement of consultation with stakeholders has been done away with (except for select countries).
11. Powers have been delegated to DRDO and CMDs of DPSUs for exploring export opportunities and participation in global tenders.
12. New simplified End User Certificate Format for Parts & Components has been provided in SOP.
13. Validity of Export Authorization for export of parts & components has been increased from 02 years to date of completion of order/component whichever is later.
14. A new provision for re-exporting parts and components for undertaking repair or rework to provide replacement for a component under warranty obligation is inserted in the SOP as a sub-classification of repeat orders.
15. MHA vide Notification dated 1.11.2018 has delegated its powers to Department of Defence Production to issue export license under Arms Rules 2016 in Form X-A, for parts & components of small arms. With this the Department of Defence Production becomes the single point of contact for exporter for export of parts and components of Small Arms & Ammunitions.
16. The Government has notified the Open General Export License (OGEL) - a onetime export license, which permits the industry to export specified items to specified destinations, enumerated in the OGEL, without seeking export authorisation during the validity of the OGEL. OGEL has been integrated with end to end online Portal.
17.  Scheme for Promotion of Defence Exports has been notified to provide an opportunity to the prospective exporters an option to get their product certified by the Govt. and provides access to the testing infrastructure of Ministry of Defence for initial validation of the product and its subsequent field trials. The certificate can be produced by the prospective exporter for marketing their products suitably in the global market.
18. A separate Cell has been formed in the Department of Defence Production to co-ordinate and follow up on export related action including enquiries received from various countries, sharing the leads with private sector & public sector companies and facilitate exports.
19. In order to boost defence exports, regular webinars are being organized with Friendly Foreign Countries (FFCs) under the aegis of DDP, MoD through Indian Missions abroad and Industry Associations with active participation from Indian Defence Industries.
20. A Scheme to provide financial support to Defence Attaches for taking up actions for promoting exports of India made defence products both of public and private sector in the countries to which they are attached has been notified.

Export of Munitions List Items specified in Category 6 of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) is restricted.  DGFT has delegated powers to Department of Defence Production to grant authorisation for export of items covered in Category 6 of SCOMET. The authorisation for export of items covered in Category 6 of SCOMET is granted in accordance with the provisions of the Standard Operating Procedure issued by the Department of Defence Production (DDP), Ministry of Defence.

7-Mar-2020: Raksha Mantri sets defence export target at $5 billion in next five years

Raksha Mantri Shri Rajnath Singh has called for an increased participation of the private sector in defence manufacturing to realise the Government’s vision of making India a $5 trillion economy by 2024. In his address at the Global Business Summit here today, Raksha Mantri said, the manufacturing sector has the potential to reach $1 trillion by 2025 and the Government is striving to achieve the goal by implementing key flagship programmes like ‘Make in India’, besides building policies relevant to the digital-economy and fostering human-capital.

Urging the defence industry to make best use of the emerging opportunities, Raksha Mantri said, a slew of structural reforms has been taken by the Government to create increased synergy between the industry and the public sector to overcome the challenges of private investment in defence. He listed out several steps taken under the ‘Make in India’ initiative, including greater scope for domestic industry in defence tenders, simplification of the industrial licensing process, hike in FDI cap, making defence export less stringent, streamlining the defence offset policy, opening the government-owned trial and testing facilities for the private sector; setting up of two defence industrial corridors and promotion of innovation through participation of start-ups and small and medium enterprises.

“In our envisaged Defence Production Policy, we have clearly spelt out our goal to achieve a turnover of $26 billion in aerospace and defence goods & services by 2025. This will have huge implications for India’s endeavours to promote R&D, innovation and its efforts to secure a place in global supply chains,” Shri Rajnath Singh said. He added that the necessity of becoming internationally competitive, globally innovative and structurally efficient demands that the private sector plays a crucial role in defence production.

Shri Rajnath Singh underlined that while the primary aim of Defence production is to cater to the needs of the Armed Forces, thrust is also being given for enhancing exports. He said, Defence Public Sector Undertakings have been encouraged to increase their export portfolio to 25 per cent of their turnover and the Government is willing to extend Lines of Credit and grants to friendly foreign countries over the next five years. “The government aims to achieve exports of defence goods & services to the tune of $5 billion in next five years. All possible support would be extended to the private sector so that they can contribute significantly to enable us to achieve the said target,” he added.

Highlighting the Government’s decision to enhance foreign equity cap from earlier 26 per cent to 49 per cent under the automatic route and beyond 49 per cent to up to 100 per cent under the government approval route, Raksha Mantri said, the increase in FDI cap has begun to show results. “Till December 2019, the defence and aerospace sector has received inflows of over Rs 3,155 crore. Of this, Rs 1,834 crore have received since 2014. I am sure that the volume of investment will increase many-fold when some of the major programmes, which are in the pipeline, move into the execution phase,” he added.

Shri Rajnath Singh stressed that the intention of the government is not just limited to bringing reforms but to act as an incubator, catalyst and facilitator for promoting investment and achieving self-reliance in defence manufacturing. “We understand that Defence R&D in private sector will take time to establish itself. To give a boost to this process, we have opened opportunities through DRDO with a zero fee for Transfer of Technology (ToT), free access to over 450 patents, access to test facilities and an upfront funding of up to Rs 10 crore. More than 900 licensing agreements for ToT have been signed with industries,” he said.

Raksha Mantri also mentioned about the opportunities being provided by the Government for the manufacture of mega defence programmes including fighter aircraft, helicopters, tanks and submarines through the Strategic Partnership Model that will allow private companies to grow in stature and become global giants in the coming years.

Shri Rajnath Singh said, Buy (Indian–IDDM) [Indigenously Designed Developed and Manufactured], Buy (Indian), and Buy & Make (Indian), are the three most preferred categories for procurement for Ministry of Defence. “By prioritising these categories over direct import, we want to provide greater scope to the local industry, including the private sector, to participate in defence contracts and contribute to the self-reliance and employment generation,” he added. Shri Rajnath Singh expressed appreciation that during the last five years, Government accorded approval to more than 200 proposals worth Rs four lakh crore in which Indian Industry would be engaged in defence manufacturing either directly or in collaboration with foreign Original Equipment Manufacturers.

Describing the Micro, Small and Medium Enterprises (MSMEs) as silent performers, Raksha Mantri said, efforts are being made to double the active their base in defence and aerospace from 8,000 to 16,000. He added that Innovations for Defence Excellence (iDEX) was formulated with the objective to bring start‐ups to innovate, develop technologies and solve problems related to Defence and Aerospace.

Shri Rajnath Singh voiced the Government’s aim to double the size of Aeronautics Industry from Rs 30,000 crore to Rs 60,000 crore by 2024 and provide increased opportunities to global aerospace industry to become supplier of Aero‐components. He said, a number of major platforms are envisaged in defence aerospace sector including India’s 90-seater civil aircraft, developing civil helicopter industry of $5 billion in PPP model, and New Aero Engine Complex in Defence Corridor with industry participation.

Raksha Mantri told the gathering that the Government has prepared a road map for Artificial Intelligence in national security to make India a significant power in defence. He said, there is a plan to develop at least 25 Defence specific Artificial Intelligence products by 2024.

Shri Rajnath Singh assured the industry that the Government is open to new ideas and committed to fully harness the energies, entrepreneurship spirit and enterprise of private sector in the defence sector. He expressed confidence that the industry will contribute even more to the Government’s efforts towards indigenisation of defence production.

Various policy makers, academicians and corporate heads were among those present on the occasion.