India’s Push Towards Defence Self-Reliance
Context
In the backdrop of prolonged geopolitical instability and supply-chain disruptions triggered by the widening West Asian crisis, strategic experts and defense economists revisited the progress of India’s indigenous military manufacturing ecosystem under the Make in India programme.
Indigenous Defence Manufacturing Ecosystem
About Indigenous Defence Manufacturing Ecosystem:
What is it?
India’s indigenous defence manufacturing framework is a long-term strategic initiative aimed at reducing external dependence on military imports and strengthening domestic production capabilities under the vision of Aatmanirbhar Bharat.
Operating through the Defence Acquisition Procedure (DAP) and allied procurement reforms, the framework seeks to create a robust domestic Military-Industrial Ecosystem by encouraging private participation, promoting technology transfers, and enhancing local value addition in weapons manufacturing.
Key Statistics Related to India’s Defence Industry:
Historic Defence Spending Expansion:
The Union Government allocated a record ₹7.85 lakh crore to the Ministry of Defence in FY2026–27, accounting for nearly 14.7% of total Union expenditure.
Massive Domestic Procurement Push:
Out of the ₹2.19 lakh crore capital acquisition budget, almost 75% (₹1.39 lakh crore) has been reserved exclusively for procurement from Indian manufacturers.
Record-Breaking Defence Exports:
India’s defence exports climbed to an unprecedented ₹38,424 crore in FY2025–26, registering over 62% annual growth and expanding nearly 31 times over the last decade.
Dominance of State-Owned Enterprises:
Despite policy liberalization, Defence Public Sector Undertakings (DPSUs) continue to contribute more than 70% of total domestic defence production, limiting competitive opportunities for private firms.
Emerging Opportunities in the Sector:
Rise of Drone-Centric Warfare:
Modern conflicts increasingly demonstrate the effectiveness of low-cost autonomous systems and precision drone technologies.
Example: Drone systems reportedly accounted for over 70% of retaliatory tactical operations in recent West Asian confrontations, creating strong demand for scalable Indian drone manufacturing.
Expansion of Defence-Tech Investments:
India’s military-tech startup ecosystem has witnessed a sharp increase in venture capital inflows and innovation funding.
Example: Investments in defence startups expanded nearly 61-fold between 2016 and 2025, reaching approximately ₹1,653 crore.
Growing International Demand for Indian Arms:
Several countries across Asia, Africa, and the Middle East are increasingly sourcing affordable and reliable military platforms from India.
Example: India secured a ₹3,800 crore export agreement for BrahMos supersonic missile systems with Indonesia.
Defence Corridors Supporting MSMEs:
Dedicated defence industrial corridors are creating specialized manufacturing clusters and logistics ecosystems.
Example: Uttar Pradesh and Tamil Nadu Defence Corridors together attracted investments exceeding ₹9,145 crore while integrating over 16,000 MSMEs.
Increased Foreign Collaboration:
Liberalized FDI rules have encouraged global defence manufacturers to establish local partnerships and assembly ecosystems in India.
Example: The 74% FDI limit under the automatic route has accelerated technology-sharing ventures between foreign OEMs and Indian companies.
Major Challenges Affecting the Sector:
Delayed Procurement Procedures:
India’s defence acquisition process remains lengthy, centralized, and administratively cumbersome.
Example: Parliamentary assessments showed delays in 119 out of 178 defence projects, with some timelines extending several times beyond initial estimates.
Frequent Changes in Technical Specifications:
Constant modifications in Qualitative Requirements (QRs) disrupt manufacturing schedules and testing cycles.
Example: Mid-project revisions in technical standards often trap manufacturers in prolonged redesign and certification stages.
Difficulty Retaining Skilled Talent:
Government defence research organizations face challenges in retaining highly specialized scientists and engineers.
Example: Rigid salary structures in public institutions have contributed to migration of talent toward global technology firms and private industry.
Structural Advantages for DPSUs:
Private manufacturers continue to face unequal access to contracts, approvals, and financing mechanisms.
Example: DPSUs frequently receive faster clearances and advance procurement commitments compared to private competitors.
Dependence on Imported Core Components:
India still relies heavily on foreign suppliers for advanced electronics and critical defence technologies.
Example: Semiconductor chips, sensors, propulsion systems, and actuators continue to be sourced largely from countries such as the U.S., France, and Russia.
Important Policy Measures Undertaken:
Strategic Partnership (SP) Framework:
The SP model promotes collaboration between Indian private firms and foreign OEMs for domestic production of advanced military platforms.
Positive Indigenisation Lists:
The Ministry of Defence has notified multiple embargo lists restricting imports of thousands of defence items that must now be procured domestically.
iDEX Initiative:
Innovations for Defence Excellence (iDEX) supports defence startups through grants, incubation, and prototype development assistance.
Simplified Export Approval Mechanism:
Online export authorization systems and streamlined No Objection Certificate (NOC) procedures have improved ease of defence exports.
Way Forward:
Creating Competitive Neutrality:
Procurement policies should ensure equal commercial and procedural treatment for private firms and DPSUs.
Strengthening R&D Incentives:
Compensation structures for scientists and engineers in public defence institutions should be aligned with global technology standards.
Focus on Next-Generation Warfare:
India should prioritize investments in AI-driven defence systems, cyberwarfare capabilities, autonomous drones, and smart battlefield technologies.
Stabilizing Procurement Specifications:
Qualitative Requirements should remain fixed once tendering begins to prevent manufacturing disruptions and cost escalations.
Developing Shared Testing Infrastructure:
Government-backed testing facilities and firing ranges should be established within defence corridors for affordable access by startups and MSMEs.
Conclusion:
The geopolitical disruptions of 2026 have reinforced the strategic risks associated with excessive dependence on imported military equipment. Although India’s defence exports and manufacturing capacity have expanded rapidly, achieving genuine self-reliance will require deeper structural reforms, faster procurement systems, stronger private-sector integration, and technological independence in critical components.
Source : The Indian Express