From UPSC perspective, the following things are important :
Prelims level : Brahmos, MTCR
Mains level : India's defence exports
On January 28, the Philippines signed a $374.96 million deal with BrahMos Aerospace Pvt. Ltd. for the supply of shore-based anti-ship variant of the BrahMos supersonic cruise missile.
Details of the contract
- The Philippines contract includes delivery of three BrahMos missile batteries, training for operators and maintainers as well as the necessary Integrated Logistics Support (ILS) package.
- The coastal defence regiment of the Philippine Marines, which is under the Navy, will be the primary employer of the missile system.
What makes the deal special?
- This is the first export order for the missile which is a joint product between India and Russia and also the biggest defence export contract of the country.
- This adds impetus to meet the ambitious target set by the Government to achieve a manufacturing turnover of $25 billion in aerospace and defence goods and services by 2025.
What is the BrahMos Missile System?
- BrahMos is a joint venture between India’s Defence Research and Development Organisation (DRDO) and Russia’s NPO Mashinostroyeniya.
- The missile derives its name from the Brahmaputra and Moskva rivers.
- Beginning with an anti-ship missile, several variants have since been developed.
- It is now capable of being launched from land, sea, sub-sea and air against surface and sea-based targets and has constantly been improved and upgraded.
- The range of the BrahMos was originally limited to 290 kms as per obligations of the Missile Technology Control Regime (MTCR) of which Russia was a signatory.
- Following India’s entry into the club in June 2016, plans were announced to extend the range initially to 450 kms and subsequently to 600 kms.
- BrahMos with extended range upto 450 kms has been tested several times since.
Deployments in India
- The missile has been long inducted by the Indian armed forces.
- The Army has recently deployed the system along the Line of Actual Control (LAC) in Arunachal Pradesh.
Which other countries are in discussion for the BrahMos missiles?
- While the first export order for BrahMos took a long time, the next order is likely to be concluded soon with negotiations with Indonesia and Thailand in advanced stages.
- Philippines is also looking at several other military procurements from India and South East Asia as the region has emerged as a major focus area for India’s defence exports.
- For instance, the HAL has received interest from Philippines Coast Guard for procurement of seven Dhruv Advanced Light Helicopters and eight Dornier Do-228 aircraft under the $100mn Line of Credit.
- In addition, maritime domain and ship building is another potential area for Indian companies in the Philippines.
What is the status of defence exports?
- India has put out a range of military hardware on sale which includes various missile systems, Light Combat Aircraft (LCA), helicopters, warship and patrol vessels, artillery guns, tanks, radars etc.
- From 2016-17 to 2018-19, the country’s defence exports have increased from ₹1,521 crore to ₹10,745 crore, a staggering 700% growth.
Steps taken by the Centre to boost defence production
- Licensing relaxation: Measures announced to boost exports since 2014 include simplified defence industrial licensing, relaxation of export controls and grant of no-objection certificates.
- Lines of Credit: Specific incentives were introduced under the foreign trade policy and the Ministry of External Affairs has facilitated Lines of Credit for countries to import defence product.
- Policy boost: The Defence Ministry has also issued a draft Defence Production & Export Promotion Policy 2020.
- Indigenization lists: On the domestic front, to boost indigenous manufacturing, the Government had issued two “positive indigenization lists” consisting of 209 items that cannot be imported.
- Budgetary allocation: In addition, a percentage of the capital outlay of the defence budget has been reserved for procurement from domestic industry.
Issues retarding defence exports
- Excess reliance on Public Sector: India has four companies (Indian ordnance factories, Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and Bharat Dynamics Limited (BDL)) among the top 100 biggest arms producers of the world.
- Policy delays: In the past few years, the government has approved over 200 defence acquisition worth Rs 4 trillion, but most are still in relatively early stages of processing.
- Lack of Critical Technologies: Poor design capability in critical technologies, inadequate investment in R&D and the inability to manufacture major subsystems and components hamper the indigenous manufacturing.
- Long gestation: The creation of a manufacturing base is capital and technology-intensive and has a long gestation period. By that time newer technologies make products outdated.
- ‘Unease’ in doing business: An issue related to stringent labour laws, compliance burden and lack of skills, affects the development of indigenous manufacturing in defence.
- Multiple jurisdictions: Overlapping jurisdiction of the Ministry of Defence and Ministry of Industrial Promotion impair India’s capability of defence manufacturing.
- Lack of quality: The higher indigenization in few cases is largely attributed to the low-end technology.
- FDI Policy: The earlier FDI limit of 49% was not enough to enthuse global manufacturing houses to set up bases in India.
- R&D Lacunae: A lip service to technology funding by making token allocations is an adequate commentary on our lack of seriousness in the area of Research and Development.
- Lack of skills: There is a lack of engineering and research capability in our institutions. It again leads us back to the need for a stronger industry-academia interface.
- Reducing import dependence: India was the world’s second-largest arms importer from 2014-18, ceding the long-held tag as the largest importer to Saudi Arabia, says 2019 SIPRI report.
- Security Imperative: Indigenization in defence is critical to national security also. It keeps intact the technological expertise and encourages spin-off technologies and innovation that often stem from it.
- Economic boost: Indigenization in defence can help create a large industry which also includes small manufacturers.
- Employment generation: Defence manufacturing will lead to the generation of satellites industries that in turn will pave the way for a generation of employment opportunities.
Back2Basics: Missile Technology Control Regime (MTCR)
- MTCR is an informal political understanding between countries to limit the spread of missiles and missile technology.
- MTCR was started by like-minded countries to prevent nuclear proliferation.
- In 1992, the original focus of the MTCR was to prevent the proliferation of missiles capable of carrying chemical, biological and nuclear warheads and as a threat to international peace and security.