India Leads Global Arms Imports Amid Shifting Dynamics

• 30 Mar 2024

For Prelims: Stockholm International Peace Research Institute, India’s Arms Import Dynamics, Positive Indigenisation Lists, Defence Industrial Corridors, Innovations for Defence Excellence.

For Mains: Recent Indian Government Initiatives Related to the Arms Industry

Source: TH

Why in News?

The latest data on international arms transfers from Stockholm International Peace Research Institute (SIPRI), India emerged as the leading arms importer globally during the period from 2019 to 2023.

• During this timeframe, India's imports increased by 4.7% when compared to the period from 2014 to 2018.

What are the Key Highlights of Recent SIPRI Data?

• Arms Importers: Nine of the 10 biggest arms importers in 2019–23, including the top 3 of India, Saudi Arabia and Qatar, were in Asia and Oceania or the Middle East.
  • Notably, Ukraine also rose as the 4^th-largest arms importer globally during this period.
• Arms Exporters: The United States, the largest arms supplier globally, witnessed a 17% growth in arms exports between the periods 2014 –18 and 2019–23.
  • Concurrently, France ascended to become the world’s second-largest arms supplier.
  • Europe accounted for a third of global arms exports, with a strong military-industrial capacity.
  • In contrast, Russia experienced a significant decline of more than half, with a decrease of -53%
• India’s Arms Import Dynamics: Although Russia remained India's primary arms supplier, accounting for 36% of its arms imports, this marked the first five-year period since 1960-64 where Russian deliveries made up less than half of India's total arms imports.
  • India is now increasingly turning to Western countries like France and the USA, as well as boosting its domestic arms industry, to meet its growing defence needs.

What is SIPRI?

• It is an independent international institute dedicated to research into conflict, armaments, arms control and disarmament.
• It was established in 1966 in Stockholm (Sweden).
• It provides data, analysis and recommendations, based on open sources, to policymakers, researchers, media and the interested public.

What are the Recent Indian Government Initiatives to Reduce Arms Imports?

• About: The Indian Defence sector, the second largest armed force is at the cusp of revolution.
  • In the Interim Budget 2024-25, the Defense Ministry received a total allocation of ₹6.2 lakh crore.
  • Within this allocation, ₹1.72 lakh crore was designated for capital expenditure, specifically for new procurements.
    • This capital allocation reflected a 5.78% increase compared to the Budget Estimates from 2023-24.
• Initiatives:
  • Positive Indigenisation Lists: The government releases Positive Indigenisation Lists to identify specific components and subsystems that must be manufactured domestically.
    • The Department of Military Affairs has recently released the 5th Positive Indigenisation List, which includes 98 items, further bolstering indigenous manufacturing in the defence sector.
  • Increased FDI Limits in the Defence Sector: It has been increased in 2020 to 74% through the Automatic Route and up to 100% via the Government Route.
  • Defence Industrial Corridors: Two dedicated Defence Industrial Corridors have been established in Tamil Nadu and Uttar Pradesh to boost defence manufacturing.
    • The Uttar Pradesh corridor encompasses nodes in Agra, Aligarh, Chitrakoot, Jhansi, Kanpur, and Lucknow.
    • The Tamil Nadu corridor includes nodes in Chennai, Coimbatore, Hosur, Salem, and Tiruchirappalli.
  • Innovations for Defence Excellence (idEX): iDEX aims to create an ecosystem for innovation and technology development in Defence and Aerospace.
    • It engages various stakeholders such as industries, MSMEs, startups, innovators, R&D institutes, and academia, providing them grants, funding, and support for R&D with potential for Indian defence and aerospace needs.
    • The initiative is funded and managed by the Defence Innovation Organization (DIO), established as a not-for-profit company under the Companies Act 2013.
  • SRIJAN Portal: It is a one-stop shop for vendors to find opportunities to manufacture defence equipment that was previously imported.
    • Defence Public Sector Undertakings (DPSUs) and other government agencies can use SRIJAN to post details about specific items they want indigenized.
    • This allows Indian companies to express their interest and collaborate on production.

Way Forward

• Defence Innovation Zones: Designating specific geographical areas as defence innovation zones, offering infrastructure support, and regulatory flexibility to attract defence startups and high-tech companies.
• Streamlined Procurement Process: Simplifying and expediting the procurement process for indigenous defence products to encourage domestic production.
  • Implementing transparent and efficient procurement policies that prioritise locally manufactured goods.
• Incentivize Indigenous Production: Providing financial incentives, tax benefits, and subsidies for companies engaged in indigenous defence manufacturing. Create a conducive ecosystem for defence startups and small-scale enterprises to thrive.
• Boosting Exports: Building a strong defence export industry that can generate revenue to support further R&D and reduce reliance on solely domestic budgets, similar to Israel's model.