Strong Building Blocks

 R.S. Mann (retd)



The Indian defence industry has made significant strides in recent years, driven by initiatives like ‘Make in India’ and the implementation of the Defence Acquisition Procedure (DAP) 2020. However, growing global and regional instability necessitates that India take decisive and timely actions to establish a robust defence industrial base capable of producing frontline defence equipment within the next 15-20 years.

The ongoing geopolitical realignments, particularly in Europe, Middle East and Southeast Asia also present significant opportunities for the Indian defence industry. Further, the ongoing Operation Sindoor, which showcased the outstanding performance of indigenous weapon systems, the enhanced national threat perception, with the inclusion of Bangladesh as an adversarial state, is driving increased domestic demand for defence equipment as well as creating new avenues for exports and strategic partnerships. Post Operation Sindoor, a domestic constituency has built-up for further significant and bold reforms to address persistent challenges and accelerate progress towards a robust defence industrial base.

This article examines the existing framework’s shortcomings, draws lessons from successful defence industrialisation strategies of nations facing similar challenges, and incorporates expert opinions. It proposes changes across the conceptual, industrial, technology and procurement domains of DAP 2020 to enable the Indian defence industry to achieve self-reliance in advanced military hardware production within specified timeframe.

Current State

A robust defence industrial base is characterised by several key elements that collectively form an ecosystem which contributes to a nation’s ability to independently produce the required military equipment. These elements include:

Overarching Strategy and Policies: A long-term overall strategy provides guidance and direction, supported by effective subordinate policies.

Empowered Supervisory and Management Body: A supervisory and management body for periodic review and course corrections based on credible feedback, operating within the above laid down policies.

Linkages:To enable synergised national effort through formal cross-disciplinary and ministerial linkages.

Strong Research and Development (R&D) Capabilities:A robust ecosystem for innovation, cutting-edge technology development and the ability to translate research into tangible defence products.

Efficient Production and Manufacturing Infrastructure: Modern facilities, skilled labour and the capacity for large-scale production of defence equipment and components, ensuring quality and timely delivery.

Active Private Sector Participation: The dynamism, innovation and specialised capabilities that private companies, including Micro, Small, and Medium Enterprises (MSMEs) and startups, bring to the sector.

Adequate Financial Resources and Investment: Sustained growth requires sufficient budgetary allocation for defence procurement, R&D, and infrastructure development, along with private and Foreign Direct Investment (FDI).

Streamlined and Efficient Procurement Processes: Timely acquisition of defence equipment demands transparency, reduced bureaucracy, specialists and faster decision-making processes. This brings stability and certainty to the defence industrial base.

Robust Supply Chain and Availability of Critical Technologies and Materials: Self-reliance necessitates access to essential raw materials and Rare Earths, components and mastery over critical technologies, reducing dependence on imports.

Effective Collaboration and Integration: Strong linkages and synergy between the different levers of the government—ministry of finance, ministry of external affairs, ministry of science and technology, ministry of defence (MoD), Department of Atomic Energy, Indian Space Research Organisation (ISRO), Service Headquarters, R&D organisations and both public and private sectors—are vital for efficiency and progress.

Skilled Human Capital:A sufficient pool of trained personnel in various specialised fields is necessary for a thriving defence industry.

Supportive Policies: Policies related to financing, ease of business, taxes and subsidies, Intellectual Property Rights (IPR), and Special Economic Zones (SEZs) are crucial.

However, the Indian defence industry faces several challenges in achieving these elements. These are:

Lack of a National Security Strategy:India lacks a clearly defined National Security Strategy to provide long-term direction to executives of the indigenous defence industrial base. This lack of a strategic approach is evident from an examination of the IDEX, as it targets innovation tactically and piecemeal, rather than enabling an innovation ecosystem.

Absence of a Structured System for Synergised Effort:There is no structured system to enable and monitor synergised effort among various stakeholders, both between ministries and well as between the Services, Defence Research and Development Organisation (DRDO), Defence Public Sector Undertakings (DPSUs), private sector and academia.

Production and technology development are intertwined but have distinct needs. While production requires scale, infrastructure and supply chains, technology demands R&D, talent and intellectual property frameworks. A single policy struggles to address both effectively as the two require distinct strategies, funding models and timelines.

Challenges in R&D and Technology Dependence: India faces challenges in translating R&D into modern weaponry and relies heavily on external sources for critical technologies, subsystems and materials.

Underdeveloped and Fragmented Manufacturing Ecosystem: Indian industry has traditionally focused more on manufacturing and assembly, rather than original design and development. The Indian defence manufacturing ecosystem suffers from underdeveloped infrastructure, including inadequate modern testing and certification facilities, Quality Assurance (QA), standardisation, outdated production lines and shortages of skilled labour.

Constraints on Private Sector Participation:Private sector involvement is constrained by a lack of a conducive financial framework, bureaucratic hurdles and a perceived preference for Public Sector Undertakings (PSUs) in major contracts. The effective integration of MSMEs into the defence supply chain also needs significant improvement.

Financial Constraints: Despite increasing defence spending, budgetary constraints persist, limiting funds for acquiring advanced weaponry, investing in R&D and upgrading infrastructure. Private investment and FDI in the defence sector also remain inadequate.

Inefficient Procurement Processes: