INTRODUCTION

India is increasingly gaining recognition as a key exporter of munitions, including artillery guns, aircraft, missile systems, armoured vehicles, and ammunitions such as missiles, rockets, and shells. Aligned with the vision of a technologically advanced and Aatmanirbhar armed forces, the defence sector has prioritised indigenisation and promotion of exports. A robust legal framework safeguarding against the proliferation and misuse of defence products is required to gain global recognition. This note outlines the Indian legal framework governing the export of munitions, the regulatory authorities, and the key requirements/compliances to be undertaken by the exporters.

LAWS GOVERNING EXPORT OF MUNITION

1. Special Chemicals, Organisms, Materials, Equipment, and Technologies (“SCOMET”): Export of items under the SCOMET list, given under Appendix 3 of Schedule 2 of ITC (HS) Classification of Export and Import Items 2018, are permitted only upon obtaining an export authorisation. Category 6 of the SCOMET list specifically covers the list of munitions that can be exported, subject to regulatory approval.
2. Explosives Act, 1884 (“Explosives Act”):The Explosives Act governs the manufacture, handling and export of explosives such as gunpowder, detonators, cartridges, etc. Exporters are required to procure an export license from the Chief Controller of Explosives. Additionally, as a pre-requisite to the export license, an exporter is required to procure a license for possession and sale of the class and quantity of explosives¹.
3. Explosives Act, 1884 (“Explosives Act”):The Arms Act, in conjunction with the Foreign Trade (Development and Regulation) Act, 1992, governs the export of arms such as pistols, revolvers, handguns, steel batons, swords, light weapons, etc., and ammunition such as rockets, bombs, grenades, shells, charges for firearms, etc. Under the Arms Act, a license is required to be procured from the DDP for the export of arms and ammunition (listed under Schedule 1 of the Arms Act).²

The export control framework is aligned with multilateral export control regimes that India is a member of, such as the Missile Technology Control Regime, Wassenaar Arrangement, and the Australia Group.³ While India is not a member of the Nuclear Suppliers Group, the guidelines and control lists are substantively harmonised with that of the Nuclear Suppliers Group.⁴

GOVERNING AUTHORITIES

1. Inter-Ministerial Working Group (IMWG), Director General of Foreign Trade (“DGFT”):The DGFT plays a crucial role in the implementation of the export control framework, especially the SCOMET list. The IMWG shall consider the applications filed for export as per the procedure under the Foreign Trade Policy. ⁵ Additionally, an entity manufacturing and processing SCOMET list items will require the permission of the DGFT (through IMWG) before entering into any arrangement involving an obligation to facilitate or undertake site visits, on-site verification or access to records/documentation, by foreign governments or third parties, either acting directly or through an Indian party.⁶
2. Department of Defence Production (“DDP”):The DGFT has notified the DDP as the licensing authority for the export of all items falling under the SCOMET munitions.⁷ Export of items for which DDP is the licensing authority will follow the standard operating procedure issued by DDP.
3. Other Authorities:
   1. The Department of Atomic Energy shall be the licensing authority for the export of items such as reactive material powders (chemical, biological, riot control agents, etc.), radioactive materials (energetic materials), nuclear power generating equipment, simulators designed for military nuclear reactors, under the SCOMET munitions list.⁸
   2. The Defence Research and Development Organisation shall be the authority for the grant of ‘no objection’ for the export of aircraft, unmanned aerial vehicles, lighter-than-air vehicles, aircraft equipment, components, etc. designed or modified for military use,⁹ and
   3. ISRO, Department of Space and Defence Research and Development Organisation shall be the authority to grant ‘no objection’ for the export of spacecraft designed or modified for military use.¹⁰

REQUIREMENTS FOR EXPORTERS

1. Importer-Exporter Code: An exporter is required to procure an Importer-Exporter Code under the Foreign Trade (Development and Regulation) Act, 1992 for exporting munition from India.¹¹
2. SCOMET: SCOMET regulates the export of several munitions by Indian exporters and sets out the procedural requirements for exporters. Key compliance requirements are highlighted below:
   1. Export of items listed under Category 6 of the SCOMET list requires prior authorisation from the relevant government authority. Where an item may fall under multiple categories, the classification that offers the most specific description prevails. Additionally, the end use of an item would play a decisive role in its classification.¹² The export authorisation will be as per the procedure laid down under Chapter 10 of the Foreign Trade Policy or as per the SOP by DDP. 
   2. The application for the authorisation shall be accompanied by an End User Certificate (“EUC”) from the importer and the importing country (if required) certifying that the equipment will not be utilised for any purpose other than those declared in the EUC, and will not be sold or transferred to any third party.¹³ Additionally, the exporter shall be required to submit a copy of the purchase order, technical specification of the items, and any other document required by the respective authority.
   3. The SCOMET authorisation shall be valid for a period of 24 months from the date of issue. The validity period may vary depending on the product exported under the SCOMET procedures or the SOP.¹⁴ 
   4. Every exporter shall be required to maintain all relevant records in manual or electronic form for a period of 5 years or till the validity of export authorisation, whichever is higher, from the date of export or import.¹⁵
    
3. Arms Act: An exporter manufacturing and exporting any arms or ammunition falling within the scope of the Arms Act, shall procure the necessary licenses under the Arms Act.
4. Internal Compliance Program (“ICP”): To ensure compliance with the export control framework, exporters are encouraged to establish an ICP. The document “Elements of an Effective Internal Compliance Program for Export/Transfer of Dual-Use Items” by NASSCOM provides the 8 core elements forming the foundation of a robust ICP – Management commitment; Organisation Structure, Responsibilities, and Resources; Performance Review and Internal Audit; Screening

CONCLUSION

India’s legal and regulatory framework for strategic trade and non-proliferation has an impeccable record supported by a streamlined inter-ministerial SCOMET licensing process, risk assessment mechanisms such as the ICP, and constant stakeholder engagement. While defence exports witnessed a temporary decline during the pandemic, the post-pandemic period has seen a significant resurgence. In the financial year 2023-24, defence exports were valued at INR 21,083 crore i.e. a 32.5% growth from the previous fiscal year 2022-23. The increase in value is a result of various steps undertaken by the government, such as the reformed export policies, reduced reliance on foreign equipment manufacturers, and introduction of measures that boost innovation and indigenous production such as the launch of Innovations for Defence Excellence’ (iDEX), increased budget allocation for domestic sourcing, defence offset policy, and collaborations between Indian companies and international manufacturers.

[1] Rule 46(3), Explosives Act, 1884.

[2] Notification S.O. 5607(E) dated 1 November 2018, Ministry of Home Affairs.

[3] Ministry of Commerce & Industry, DGFT updates the SCOMET List with recent policy changes and updates in the multilateral export control regimes, https://pib.gov.in/PressReleasePage.aspx?PRID=2051331.

[4] Internal Compliance Programme for Effective Export Controls, Ministry of External Affairs India, https://www.youtube.com/watch?v=.

[5] Paragraph 10.06, Chapter 10 of the Foreign Trade Policy, DGFT.

[6] Paragraph 10.08, Chapter 10 of the Foreign Trade Policy, DGFT.

[7] Ministry of Commerce & Industry, DGFT updates the SCOMET List with recent policy changes and updates in the multilateral export control regimes, https://pib.gov.in/PressReleasePage.aspx?PRID=2051331.

[8] SCOMET, Category 6 – Munitions List, Note 2.

[9] SCOMET, Category 6 – Munitions List, Note 7.

[10] SCOMET, Category 6 – Munitions List, Note 8.

[11] Section 7, Foreign Trade (Development and Regulation) Act, 1992.

[12] Commodity Identification Note to SCOMET, Note 1 – Appendix 3

[13] Paragraph 10.04, Chapter 10 of the Foreign Trade Policy, DGFT.

[14] Paragraph 10.17, Chapter 10 of the Foreign Trade Policy, DGFT; and Paragraph 9 of the Standard Operating Procedure, Department of Defence Production.

[15] Paragraph 10.18, Chapter 10 of the Foreign Trade Policy, DGFT; and Paragraph 13 of the Standard Operating Procedure, Department of Defence Production.