Why in News?

The Ministry of External Affairs dismissed a U.S. media report as "factually incorrect and misleading," which alleged that Hindustan Aeronautics Limited (HAL) supplied British-sourced items to Russia.

The ministry emphasized that India’s strong legal and regulatory framework on strategic trade governs its companies’ overseas commercial activities. It accused the report of distorting facts to fit a political narrative and noted that similar unfounded allegations have surfaced since the Ukraine war began in 2022.

What’s in Today’s Article?

• Importance of Strategic Trade Controls
• India’s Licensing System for Strategic Exports
• Steps Taken to Boost Defence Exports

Importance of Strategic Trade Controls

• Strategic trade controls are essential to prevent the proliferation of Weapons of Mass Destruction (WMD) and the unregulated transfer of conventional arms.
• According to the DGFT’s Handbook on India’s Strategic Trade Control Systems, India maintains a harmonised export control list for dual-use and military items—including software and technologies—with both civilian and military/WMD applications.
  • Directorate General of Foreign Trade (DGFT) works under the Ministry of Commerce and Industry.
• These items require export authorisation or licences, unless specifically exempted or prohibited.
• Boosting Defence Exports
  • As India targets ₹50,000 crore in defence exports by 2029, robust export controls are key to maintaining credibility and compliance with international norms.
  • In FY 2024-25, defence exports reached a record ₹23,622 crore—a 12.04% increase over the previous year—demonstrating growing global demand.
• Neutral Policy Stance
  • India’s strategic export decisions reflect its neutral stance in global conflicts.
  • For instance, during the early stages of the Gaza conflict, India declined Israel’s request for artillery shells.
  • Similarly, it refrained from supplying “kinetic equipment” to either Russia or Ukraine, maintaining a balanced diplomatic position.

India’s Licensing System for Strategic Exports

• India’s export control system aligns with its commitments under international disarmament and non-proliferation treaties such as the Chemical Weapons Convention (CWC) and Biological Weapons Convention (BWC).
• It is also a member of key multilateral export control regimes, including:
  • Missile Technology Control Regime (MTCR)
  • Wassenaar Arrangement (munitions and military items)
  • Australia Group (biological and chemical items)
• SCOMET List and Export Authorisation
  • Exports are regulated through the Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) list, which has eight categories.
  • Category 6, which includes Munitions List items, requires export authorisation issued by the Department of Defence Production (DDP).
• Public and Private Sector Involvement
  • As per a December 2024 report to a Parliamentary committee, the Defence Secretary stated that India is exporting to over 100 countries, primarily through Public Sector Undertakings (PSUs).
  • Key exported platforms include:
    • Dornier 228 aircraft
    • 155 mm advanced towed artillery gun
    • BrahMos and Akash missiles
    • Radar simulators and Pinaka rockets
  • However, the private sector is also increasingly participating in defence exports, signaling a broader base for India’s export ecosystem.

Steps Taken to Boost Defence Exports

• Simplification of Licensing and Regulatory Framework
  • The Defence Products List requiring industrial licences has been rationalised.
  • Manufacturing of most parts/components no longer requires an industrial licence.
  • Defence Production and Export Promotion Policy has been formulated to support industry growth.
• Streamlining Export Procedures
  • Standard Operating Procedures (SOPs) for exports have been streamlined.
  • An Export Promotion Cell has been set up within the Ministry.
  • DPSUs have been assigned specific geographical regions for targeted marketing of defence products.
• Digital Transformation and Ease of Access
  • An end-to-end online portal has been developed for submitting and processing export authorisation applications.
  • Applications and authorisations are digitally signed, enhancing speed and transparency.
  • Requirement of government-signed End User Certification has been removed for providing engineering services related to Munitions List items to Wassenaar Arrangement countries.
• Institutional and Policy Support
  • The Defence Export Promotion Scheme (2018) was launched to encourage exports of ‘Make in India’ products.
  • The DDP now acts as the single point of contact for issuing export licences for parts/components of small arms and ammunition, following delegation of powers from the Home Ministry (2018).
• Introduction of Open General Export Licence (OGEL)
  • The OGEL allows firms to export specified defence items to designated countries without needing case-by-case authorisation, significantly reducing delays and boosting export confidence.