InvestorQ : Is the government plan to grow defence exports 4 times in 3 years really practical?
Anu Biswas made post

Is the government plan to grow defence exports 4 times in 3 years really practical?

Ria Jain answered.
1 month ago

That is hard to say at this point of time, but one thing is certain that this government has a huge focus on defence exports. The government is right in the sense that India has only scratched the surface as far as its potential in defence exports are concerned. But the targets look steep. For instance, India recorded defence exports of Rs8,000 crore in FY22 and now wants to cross defence exports of Rs35,000 crore by FY25. We must not forget that in the last 8 years cumulative defence exports was just about Rs30,000 crore. However, the defence minister Rajnath Singh appears to be keen on benchmarking with the pre-2014 era.

Rajnath is not entirely wrong. Prior to 2014, the total defence exports used to be a paltry Rs1,200 crore. This government has surely started the change through indigenization of defence production, farming out larger orders of Indian defence forces to Indian companies and also using the PLI scheme and Atma Nirbhar Bharat focus to boost defence exports. In FY23, the defence exports in H1FY23 is already as much as India exported in the whole of FY22. At the Gujarat defence expo, a total of 450 agreements related to defence were sealed entailing an investment outlay of Rs150,000 crore.

One of the biggest boosters for indigenous defence manufacture and defence exports comes from the highly successful PLI (production linked incentive) scheme. This scheme offers incentives based on actual production in India. The PLI scheme is not only intended to manufacture defence products domestically, but also acts as an incentive for global companies to park base in India and then export from here. It remains to be seen if that is feasible with the security issues involved in such a venture. There is already a positive indigenization list of over 410 items and more than 3,000 components for defence.