India’s Strategic Trade Controls and Defence Exports

In recent developments, India’s Ministry of External Affairs (MEA) defended the country’s strategic trade practices. This came in response to a U.S. report that alleged the Defence Public Sector Undertaking (DPSU) Hindustan Aeronautics Limited (HAL) supplied items to Russia. The MEA labelled the report as misleading, asserting that Indian entities adhere to international obligations on strategic trade controls.

Strategic Trade Controls

Strategic trade controls are essential for preventing the proliferation of Weapons of Mass Destruction (WMD) and regulating the transfer of military items. India’s regulatory framework is designed to ensure compliance with international norms. The Handbook on India’s Strategic Trade Control Systems outlines the importance of these controls in maintaining national and global security.

India’s Export Control Framework

India maintains a harmonised list of dual-use and military items. This list includes software and technologies that can be used for both civilian and military purposes. Export authorisation is required for most items on this list unless specifically exempted. This framework is crucial as India aims to increase its defence exports .

Recent Growth in Defence Exports

India’s defence exports reached ₹23,622 crore for FY 2024-25, marking a 12.04% increase from the previous year. The government aims to achieve a target of ₹50,000 crore by 2029. This growth is attributed to simplified licensing requirements and proactive government initiatives.

Licensing System for Defence Exports

India is a signatory to key international agreements on disarmament. It is part of major export control regimes, including the Missile Technology Control Regime (MTCR) and the Wassenaar Arrangement. The Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) list governs the export of controlled items. The Department of Defence Production (DDP) is responsible for issuing export authorisations.

Measures to Boost Defence Exports

The Government of India has introduced several measures to streamline the export process. The Defence Production and Export Promotion Policy was established to facilitate defence production and exports. The DDP has been empowered to issue export licences for small arms components, making it the single point of contact for such exports.

Technological Advancements in Export Processes

An online portal has been developed for processing export authorisations. This portal allows for digital signatures, enhancing efficiency. The requirement for government-signed End User Certification for certain transactions has been waived, further expediting the export process.

Open General Export Licence (OGEL)

The introduction of the Open General Export Licence allows defence firms to export specified items without prior authorisation. This initiative aims to simplify the export process and encourage the growth of the defence industry.

International Relations and Defence Policy

India’s defence policy reflects a commitment to neutrality in conflicts, as demonstrated by its stance on the Israel-Gaza conflict and the Russia-Ukraine war. The government has chosen not to supply arms to either side, focusing instead on maintaining strategic autonomy.

Questions for UPSC:

1. What are the implications of strategic trade controls on international relations? Critically analyse.
2. Estimate the impact of India’s defence export growth on its economy and global standing.
3. Point out the key components of India’s export control framework and their significance.
4. What is the role of the Department of Defence Production in regulating defence exports? Discuss.

Answer Hints:

1. What are the implications of strategic trade controls on international relations? Critically analyse.

1. Strategic trade controls help prevent the proliferation of Weapons of Mass Destruction (WMD), encouraging global security.
2. They enhance compliance with international norms, which can improve diplomatic relations among countries.
3. Effective controls may lead to increased trust and cooperation in defense and technology sharing.
4. Conversely, they can create tensions if perceived as restrictive or discriminatory by trading partners.
5. Countries with robust controls are often viewed more favorably in international forums, enhancing their influence.

2. Estimate the impact of India’s defence export growth on its economy and global standing.

1. Defence export growth contributes to GDP, with a target of ₹50,000 crore by 2029 indicating ambitious economic aspirations.
2. Increased exports can lead to job creation and technological advancements within the domestic defense industry.
3. India’s rising status as a defense exporter enhances its geopolitical influence and strategic partnerships.
4. Successful exports can improve the balance of trade, strengthening the overall economy.
5. India’s position among the top 25 arms exporter nations boosts its global standing and market competitiveness.

3. Point out the key components of India’s export control framework and their significance.

1. The SCOMET list regulates the export of dual-use and military items, ensuring compliance with international obligations.
2. Export authorisation is mandatory for most items, which helps prevent misuse and proliferation of sensitive technologies.
3. India’s membership in international export control regimes (e.g., MTCR, Wassenaar Arrangement) enhances its credibility.
4. Streamlined licensing processes facilitate smoother export operations, encouraging domestic and foreign investments.
5. The Defence Production and Export Promotion Policy promotes indigenous production, boosting self-reliance and reducing dependency on imports.

4. What is the role of the Department of Defence Production in regulating defence exports? Discuss.

1. The Department of Defence Production (DDP) issues export authorisations, ensuring compliance with national and international regulations.
2. It manages the SCOMET list, providing a structured framework for controlled items and technologies.
3. DDP serves as a single point of contact for small arms exports, simplifying processes for manufacturers.
4. It implements policies that promote defense production and export, contributing to national security and economic growth.
5. Through initiatives like the Defence Export Promotion Scheme, DDP encourages innovation and competitiveness in the defense sector.