Modi 2.0 regime enhances India’s Defence Exports Licensing Policy

On 17 June 2019, it was announced during a defence export promotion event organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) that India is devising plans to launch a new licencing regime to support defence export.

Speaking at the event, and in comments published in the FICCI press release, Sanjay Jaju, Joint Secretary in the Indian Ministry of Defence’s (MoD’s) Department of Defence Production (DDP), stated that the new ‘Open General Export Licence (OGEL)’ scheme will be formally introduced in July.

Although the details of the new policy were not divulged completely, the Indian Official indicated that the new mechanism would aim to ease the administrative burden on Indian defence exporters. “We are working on launching the Open General Export Licence [system] where the entire process of [getting] permission from government will be further reduced,” he said.

“We are trying to come up with a solution where an open general export license for certain products to certain countries will be issued. Those companies which register under particular license can export these items and give us declaration over a quarter, or a month or a year, and maintain records at their own premises”, Jaju stated further. The new licencing regime will support local defence companies’ access to international markets and further promote industrial competitiveness by looking for newer platforms and avenues. As of now, there is no formal or official notification by the Indian Ministry of Defence. However, there have been speculation by some defence analysts that the new licensing policy would be similar in nature to OGEL method applied by the UK.

The UK government, through its Export Control Organisation, issues OGELs as pre-published export licences. They are regarded as flexible as long as all pre-set conditions are met because they allow the export of controlled items to lists of specific destinations. The issue of an OGEL means exporters do not need to apply for standard individual licences, which allow the export of a specific item to a specific destination.

The new licencing procedures being prepared by India follows several other reforms in recent years to boost Indian defence exports. These include the introduction of an online export authorisation procedure; a revised export control list, which consolidated and eased requirements for several lines of products; and an initiative to encourage DDP officials to highlight defence export opportunities within 15 days of a visit to a foreign country.

In addition, the Defence Ministry unveiled a plan to increase overseas diplomatic engagement to support defence exports. The plan is centred on encouraging defence attachés posted in embassies and consulates to play a leading role in highlighting opportunities. India has ambitious defence export targets. According to a draft defence production policy in 2018, the government’s aim is to achieve yearly exports worth INR350 billion (USD5 billion) by 2025. In efforts to boost international sales, the Ministry of Defence (MoD) has identified 85 target countries. The targets were revealed in the MoD’s plan which aimed to encourage defence attachés to play a deeper role in promoting defence exports. These countries have been classified as per the possibility of exports.

Category A countries are those that are deemed by the MoD to have “significant export potential and where substantial exports have already taken place”. This category encompasses 23 countries and includes Egypt, Malaysia, Nigeria, Saudi Arabia, Thailand, Turkey, the UK, the US, and Uzbekistan to name a few. For this category, defence attaches will get $50,000 annually. Category B – or those countries where the MoD views that “the possibility of exports exists” – covers 17 countries, including Australia, France, Indonesia, Japan, Kenya, the Philippines, Qatar, South Korea, and Sweden. Category C – where the MoD sees “limited possibilities for exports” – includes the remaining 45 countries. These countries include Belgium, Brazil, Greece, Hungary, Israel, the Netherlands, Poland, Portugal, and Russia. In a statement on the export promotion scheme, the Ministry of Defence said, “The scheme will play a catalytic role in addressing interventions required for exploring new markets and promoting export-oriented activities by defence attaches in the countries to which they are attached.”

The MoD further added: “India is emerging as a manufacturing hub for defence production and Defence Production Policy 2018 envisages an export target of Rs 35,000 crore by 2025.

Defence attaches deputed across the world, therefore, play a pivotal role in showcasing India’s capabilities in defence product manufacturing and promoting export of defence products.”

Source: NDT

Image Courtesy: Rediff