Arms Exports: Filling the Budgetary Gap

21 Dec, 1999    ·   299

Wg. Cdr. N. K. Pant looks into the various options to meet the increasing monetary requirements of the Indian armed forces
Wg.Cdr. NK Pant (Retd.)
Indian defence planners have reportedly finalised a long list of combat and support equipment to add further teeth to our front line troops. Amongst the inescapable priorities are satellite surveillance, UAVs, battlefield surveillance radars, thermal imaging devices, laser guided 155 mm projectiles, additional combat aircraft, advanced jet trainers(AJT) and helicopters. Notwithstanding the current financial year’s Rs 45694 crore budgetary allocation for defence, the BJP led National Democratic Alliance ruling coalition will have no alternative but to knock at the parliament’s doors seeking sizeable supplementary grants to meet the emergent needs of the armed forces. 

 

 

Another significant option to meet the increasing monetary requirements of the armed forces is to generate considerable earnings from exports of arms, ammunition and related support equipment manufactured by eight defence public sector units and thirty nine ordnance factories. The profits in the foreign exchange thus gained could be ploughed back in the defence kitty where the declining value of the Rupee is robbing it of its purchasing power in the international arms market. Unfortunately India ’s performance in the field of the arms sales has been quite dismal. The Chinese sell military hardware worth $600 million every year to the third world countries which include our immediate neighbours such as Pakistan , Bangladesh , Myanmar and Sri Lanka . Even Pakistan ’s performance in this regard is much better than India ’s. About 20 per cent of Pakistan Ordnance Factories’ output goes to meet the export commitments. There have been even fighter jets and trainer aircraft on Pakistan ’s export list. Consequently, the arms exports are fetching Islamabad more than $100 million annually. 

 

 

India with much stronger industrial and technological base, has not yet fully shed its past inhibitions on selling military equipment to the foreign governments. The ministry of external affairs still reportedly maintains a negative list of countries where sale of military hardware is considered a taboo. Now with the passage of time New Delhi seems to be emerging out of the self imposed utopia of the past. As India shakes itself out of the long slumber, it finds many other competitor nations in the lucrative international arms markets. 

 

 

Despite such a miserable show in the sphere of defence related exports, the publicity hype of the performers, all government controlled companies, seems to have overshadowed their actual performance. The Bharat Electronics(BEL) with nine electronic units spread all over the country in one of its publicity bravados asserts that exports play a key role in the company’s strategic perspective. The company claims to have supplied radar sub-assemblies to UK , Switzerland , Holland and Sweden , night vision goggles to Israel , semiconductor devices and electron tubes to the Asia Pacific rim countries including the USA and so on. The Hindustan Aeronautics Limited (HAL) with more than half a dozen manufacturing plants, was awarded "Regional Top Exporters’ Shield" for the fifth consecutive year by Engineer Export Promotion Council. On the contrary, the official facts and figure speak otherwise. The defence public sector undertakings and the ordnance factories all put together have made exports of mere Rs 76 crore as against the modest target of Rs 189 for the year 1988-99. 

 

 

The parliament’s standing committee on defence in its sixth report tabled in the Lok Sabha in March,1999 had lamented that the ministry of defence had not been able to successfully tap the markets abroad for export of ordnance factories’ products. The committee had asked the union government to provide special waiver of licence restrictions, currently applicable to indigenous defence products in order to boost their sales potential in the international markets. It also recommended to the government to gear up India ’s embassies and high commissions to formulate sound strategies for defence exports and also set up separate division in the ordnance factory board for boosting up the sales drive. 

 

 

There is still a good scope for the nation’s defence hardware especially in the third world countries provided the quality, dependability and durability of the weapon systems are comparable to the best in the world. Moreover, reasonably lower, affordable cost factor and easier availability of credit line coupled with the determined drive to push the sales abroad can be of great help in making inroads on the defence export front. The expertise of India ’s burgeoning private sector must also be utilised in achieving the objectives. It is estimated that over the next five years, the six nations of the Gulf Co-operation Council (GCC) alone are expected to commit US $ 60-80 billion to their respective defence budgets. There are several other developing friendly countries in south and south east Asia, the middle east and Africa with enhanced defence outlays which can be persuaded to meet a part of their requirements of military equipment from India . Several commercially viable technologies developed by India ’s defence research and development organisation can also become a good source of earnings which could be channelled back to bolster the research and development efforts. 

 

 

 

 

 

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