India’s Defence Sector Transformation Under Atmanirbhar Bharat
CONTEXT
India has witnessed unprecedented growth in its defence manufacturing and overseas sales during FY 2024–25, reflecting a decisive move towards domestic capability-building under national self-reliance initiatives. The Government has also outlined ambitious future goals of touching ₹3 lakh crore in defence output and achieving ₹50,000 crore in exports by 2029, indicating India’s intention to become a prominent supplier of military equipment globally.
OVERVIEW OF INDIA’S MARCH TOWARD DEFENCE SELF-SUFFICIENCY
Major Trends and Sectoral Indicators
1. Surge in Domestic Manufacturing
India’s homegrown military production rose sharply to ₹1,27,434 crore in FY 2023–24, compared to ₹46,429 crore nearly a decade ago, marking over 170% growth powered by sustained reforms and capacity expansion.
2. Highest Annual Production in FY 2024–25
Overall output touched approximately ₹1.54 lakh crore, supported by continuous improvements across state-owned enterprises, private manufacturers, and a rapidly rising MSME network.
3. Significant Growth in Military Exports
Outbound defence shipments climbed to ₹23,622 crore in FY 2024–25, a significant jump from under ₹1,000 crore in 2014, highlighting India’s growing credibility in international defence markets.
4. Expanding Role of Private Industry
The contribution of private companies grew further, supported by more than 16,000 MSMEs delivering critical parts, sub-systems, and specialised components for advanced systems.
5. Boost in Domestic Orders
During FY 2024–25, the Defence Ministry finalised 193 procurement contracts worth ₹2.09 lakh crore, with the majority entrusted to Indian firms—strengthening domestic defence ecosystems.
EMERGING PROSPECTS FOR INDIA’S DEFENCE ECOSYSTEM
1. Defence Manufacturing Corridors
Industrial corridors in Uttar Pradesh and Tamil Nadu have drawn over ₹9,000 crore in realised investment and over ₹66,000 crore in projected commitments, creating hubs for aerospace, armored systems, and precision engineering.
2. Expanding International Footprint
India now supplies military goods and systems to nearly 80–100 nations, creating avenues for collaborations involving training, maintenance support, spares, and technology-led services.
3. Rising Potential for Overseas Investment
Relaxed investment norms—allowing majority foreign ownership—have created favourable conditions for joint ventures, co-development, and advanced technology partnerships.
4. Digitalised Export Permissions
An online authorisation system issued over 1,700 export approvals in FY 2024–25, reducing clearance time, improving accountability, and drawing more participants into the export ecosystem.
5. Thriving Innovation Landscape
Government-backed initiatives, including large-scale R&D funds, iDEX programmes, and DRDO’s technology development grants, are enabling start-ups, researchers, and innovators to work on disruptive defence solutions.
REFORMS STRENGTHENING DEFENCE CAPABILITY
1. Modernised Acquisition Framework
Updated procurement rules give preference to Indian-designed platforms, accelerate approvals, and promote integration of frontier technologies like AI, automation, and cyber solutions.
2. Streamlined Revenue Procurement Manual
The new procurement guidelines simplify procedures for revenue purchases worth around ₹1 lakh crore by introducing uniform standards and end-to-end digital processing.
3. Indigenisation Drive
Multiple lists restricting import of components, subsystems, and major equipment are pushing Indian firms to expand capacity and develop domestic alternatives.
4. Overhaul of Ordnance Production Structure
Conversion of the old Ordnance Factory Board into seven specialised public-sector units has enhanced operational flexibility and improved performance metrics.
5. Export Facilitation Measures
User-friendly licensing, digital authorisation, and a dedicated support cell have improved ease of exporting and helped Indian firms widen their overseas presence.
PERSISTENT BOTTLENECKS IN THE DEFENCE SECTOR
1. Limited High-End Technology Capability
Despite progress, India continues to depend on foreign suppliers for propulsion, seekers, composites, and sophisticated electronics, resulting in heavy licensed production.
2. Insufficient Production Capacity
Local output still falls short of the requirements of the Armed Forces, compelling continued dependence on overseas vendors for complex platforms.
3. Weak International Competitiveness of PSUs
State-run defence companies often face setbacks in global bids—seen in unsuccessful attempts by HAL and GRSE—restricting India’s export expansion.
4. Slow Execution of Reforms
Lengthy procedures, delays in negotiations, and complex compliance requirements often obstruct effective implementation of policy changes.
5. Heavy Reliance on Imported Sub-Components
Dependence on foreign-origin steels, composites, avionics, and control systems exposes India to supply-chain vulnerabilities.
FUTURE ROADMAP
1. Invest in Critical Technologies
Prioritising research in propulsion, advanced materials, sensor suites, and electronic warfare systems is essential for reducing external dependence.
2. Enable Private Sector Growth
Stable long-term orders, access to testing centres, and transparent competition will allow private industry and MSMEs to scale up and innovate.
3. Increase Funding for R&D
Raising the share of defence R&D to 8–10% of the overall budget is necessary for indigenous design and development of complex platforms.
4. Enhance Export Outreach
Offering favourable financing, regional service hubs, and joint training missions will strengthen India’s presence in Africa, Southeast Asia, and West Asia.
5. Faster and Predictable Procurement
Introducing single-window systems, real-time programme management, and better monitoring mechanisms will shorten timelines and ensure timely delivery.
CONCLUSION
India’s defence landscape is undergoing a transformative shift with unprecedented production levels, expanding export potential, and a rapidly deepening innovation base. Sustaining this progress will require stronger technology investments, a more empowered private sector, and strategic international partnerships. If current momentum continues, India is well placed to evolve into one of the top defence manufacturing nations by the next decade.
Source : PIB