- Indian Government has finalised a new standard operating procedure (SOP) to speed up the sale of military equipment to friendly countries through defence lines of credit(LoC) which is similar to the foreign military sales (FMS) programme of the US.
- Currently,the SOP will be applied for defence PSUs and Ordnance Factory Board.After its working stabilises,the SOP will be extended to private sector companies producing defence equipment.
- Under the new SOP, the Indian defence companies will directly quote the prices of the identified products at the rate they were sold to the Indian armed forces with built-in escalation and exchange costs.This will shorten the negotiations and price discovery process.
- However,India cannot match China in terms of arms exports as it continues to suffer with the strategically-vulnerable position of being the world’s second largest arms importer due to a weak indigenous defence industrial base.
- China has emerged as the world’s fifth largest arms exporter after the US, Russia, France and Germany by a determined focus on indigenous defence production and reverse-engineering of advanced military technology.
- Further,India might not have a robust defence production sector but it does have some weapons systems like the (a)BrahMos supersonic cruise missiles produced in collaboration with Russia (b)indigenous ones like the Akash surface-to-air missile systems (c)Tejas light combat aircraft and (d)Dhruv advanced light helicopters which can be successfully exported to other countries.
- LOC is an arrangement between a financial institution usually a bank and a customer that establishes the maximum loan amount the customer can borrow.The borrower can access funds from the line of credit at any time as long as they do not exceed the maximum amount (or credit limit) set in the agreement and meet any other requirements such as making timely minimum payments.
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