The Ministry of Defense announced that the defense export rate hits Rs 236222 crore in fiscal year 2024-25. |Photo source: Ministry of Defense through PTI photos
Story so far: The Foreign Ministry said last week that India’s strong legal and regulatory framework on strategic trade continues to guide its companies’ overseas commercial enterprises. It responded to a U.S. media report that claims that the Defence Public Sector Commitment (DPSU) Hindustan Aeronautics Limited (HAL) offers projects from British companies to Russia.
What does MEA say?
The Indian entities mentioned in the report have strictly followed all international obligations on strategic trade controls and end-user commitments, the MEA said. It observed that the report attempts to “frame the problems and distort facts” to fit “political narratives.” This is not the first time such an allegation has been filed. Similar charges have been made in the past few years since the beginning of the Ukrainian War in 2022.
Why are regulations important?
The main purpose of Strategic Trade Control/Export Control is to prevent the proliferation of weapons of mass destruction (WMD) and their delivery systems, as well as the uncontrolled transfer of traditional weapons/military projects, and the manual has released the Strategic Trade Control System (DGFT) Bureau (DGFT) of India under the Ministry of Commerce and Industry. “As a result, India’s export controls on dual use and military items (including software and technology, with potential civilian/industrial applications and military and WMD use. Some are prohibited except for restrictions/permitted under export authorization or license (unless otherwise exempted),”
Effective export control is crucial as India wants to significantly expand its defense exports, with the current goal of reaching Rs 5,000 crore by 2029. On April 1, the Ministry of Defense announced that the defense export rate reached Rs 23.6222 crore in the fiscal year 2024-25, an increase of Rs 25.39 crore, exceeding the previous 0.04%. Over the past few years, the government has taken a series of steps to promote exports by simplifying licensing requirements. As the Hindus reported, defense sources stressed that in the first few days of the Gaza offensive, Israel demanded shells, but India adopted a policy decision not to provide them. Likewise, it decided to remain neutral between Russia and Ukraine and stands not to provide “dynamic equipment” to either of them.
How does the licensing system work?
India is a member of the International Disarmament and Non-Proliferation Convention, such as the Chemical Weapons Convention (CWC) and the Biological Weapons Convention (BWC). India is also a member of the major multilateral export control regime – the Missile Technology Control System (MTCR), Vasnar’s arrangements for ammunition and military projects; and the Australian Biology and Chemical Substances Group. In line with this, India retains a list of items for export under the list of Special Chemicals, Biology, Materials, Equipment and Technology (SCOMET). There are eight categories in the SCOMET list, and the authorization of ammunition list items issued by the Department of Defense Production (DDP) is listed in the 6th category.
According to a report in December 2024, the Defense Minister told the Standing Committee of the Parliament, “I will tell you very briefly that we will export to over 100 countries, most of which are done by our PSU. But now the private sector is also stepping up. The main platform we complete is the main platform we do. There are a lot of things, but most of the exports are driven by PSU.”
What steps have been taken to increase exports?
Various policy measures have been taken to mitigate approval/certificate of defense production by Indian companies while maintaining effective control. The list of defense products requiring an industrial license is rationalized and most parts or components do not require an industrial license. Policy on promoting national defense production and exports has also been formulated. DDP issued authorizations for export of items in the ammunition list. “These equipment are exported to various countries around the world. The names of countries that signed contracts and negotiated with them cannot be disclosed for strategic reasons,” the Ministry of Defense said in a written reply to parliament in February 2023.
The Ministry of Defense further informed the Standing Committee that export operating procedures for export standards have been simplified, export promotion units have been established, and that DPSU has been allocated to the geographical area for marketing. A defense export promotion program was launched in 2018 to promote Indian products. A complete end-to-end online portal has been developed for receiving and processing export licenses. According to the Department of Defense, applications submitted by the portal will be signed digitally and authorizations will also be issued digitally to improve pace. “The government-signed requirements for end-user certification have been granted to the state in the case of providing engineering services (technology transfers) related to the list of ammunitions,” the Ministry of Defense said.
In addition, the Ministry of the Interior passed a notice in November 2018 that it had granted its powers to DDP to issue export licenses under the 2016 weapons rules for parts and components of small arms. The ministry said that using this DDP becomes a single point of contact for the export of parts and components of small arms and ammunition.
The government also notified a one-time general export license (OGEL), a one-time export license, which allows defense industry companies to export designated projects to designated destinations listed in OGEL without seeking an export authorization.
publishing – April 6, 2025 02:24 AM IST
