(Editor’s Note: Updated at 9 am today with expert opinions on the defence export trend all over the article.)
New Delhi: India could achieve just about 25 per cent of its $2-billion defence export target in the first six months of this fiscal that began Apr. 2020, hit badly by the global impact of the COVID-19 pandemic.
The Indian public and private sector companies could jointly achieve only Rs 3,693 crore ($500 million) against a target of Rs 15,000 crore ($2 billion) worth of defence exports between Apr. and Sep. this year, as per data available with the Department of Defence Production till Oct. 9. Check them out in Charts 1 and 2 below.
The most important reason for this downward trend in defence exports of India is the Coronavirus pandemic-related lock down globally, according to Indian Defence Equipment Exporters Association director and former Hindustan Aeronautics Limited chairman and managing director R. K. Tyagi.
Tyagi is certain that this is a temporary trend, and the Indian defence exporters would recover well with an upward tick in the market by the first half of the 2021-22 fiscal, between Apr. and Sep. 2021.
Here are some more eye-catching information charts that tell you a greater story on India’s exports:
NOTE: Government of India‘s fiscal year begins in Apr. and ends next Mar.
In the last three financial years between 2017-18 to 2019-20, India’s defence exports have witnessed a positive growth.
From a Rs 4,682 crore ($638 million) defence exports in 2017-18, India’s performance grew to Rs 8,320 crore ($1.13 billion) in 2018-19, a cool 44 per cent growth year-on-year.
In 2019-20 fiscal at Rs 9,116 crore ($1.24 billion) defence exports, India witnessed a 8.7 per cent growth year-on-year. See Chart 3 below.
A comparison between the defence export performance of the private sector and the public sector companies too throws up an interesting picture.
In the current financial year, India’s private sector companies have done 147 times more exports than the nine Defence Public Sector Undertakings (DPSUs) and 41 factories of the Ordnance Factory Board (OFB) put together.
NOTE: India’s DPSUs are Mazagon Dock Shipbuilders Limited, Garden Reach Shipbuilders and Engineers Limited, Goa Shipyard Limited, Hindustan Shipyard Limited, Hindustan Aeronautics Limited, Bharat Electronics Limited, Bharat Dynamics Limited, BEML Limited and Mishra Dhatu Nigam Limited.
That is, the private sector has so far this fiscal year since Apr. done Rs 3,555.34 crore ($484 million) defence exports against Rs 24.23 crore ($33 million) worth of exports done by the DPSUs and the OFB.
In the last fiscal too, the Indian private companies have done nine times more exports than the DPSUs and the OFB put together.
That is, in 2019-20 fiscal, the private sector did defence exports worth Rs 8,007.81 crore ($1.09 billion) against Rs 904.74 crore ($132 million) done by the DPSUs and the OFB.
The data for the last five fiscal years since 2016-17 shows that the private sector had overtaken the DPSUs and Ordnance Factories in defence export performance four years ago. Do the comparison in Chart 4 below.
With the defence offsets now being considered as part of exports, it is no wonder that there is a spike in the performance trend, according to Vishal Nigam, author of the book ‘Dragon in the Air: Transformation of China’s Aviation Industry and Air Force‘.
R. K. Tyagi, who was President of the Aeronautical Society of India for five years till Dec. 2019, agrees with Nigam’s views. “Offset is driving the defence exports and is a major contributor to the private sector exports in the 2020 fiscal,” he said.
“But with offsets gradually phasing out, we will have to see the defence exports number in couple of years from now to assess its reality,” Nigam said.