Context: India’s defence sector is undergoing significant transformation, driven by modernization efforts, self-reliance initiatives, and strategic global partnerships. These developments aim to enhance military capabilities and position India as a major player in the global defence market.

India’s Defence Sector: Current Overview

• Growth in Defence Production:

• Union Budget FY 2024-25: Rs 6.22 lakh crore (approx. $75 billion) allocated to the Ministry of Defence.

• Indigenous Production: Achieved record growth in FY 2023-24 with Rs 1,26,887 crore, a 16.7% increase from the previous year.

Growing Defence Exports

• Defence exports rose 14 times between FY17 and FY24, reaching $2.6 billion.

• Future Targets: $5 billion by 2025 and $7 billion by FY30.

• Key markets: Southeast Asia, Africa, and the Middle East.

Budget Allocation:

• Capital outlay of Rs 1.62 lakh crore in FY 2023-24 for indigenous procurement, reducing dependency on foreign suppliers.

Key Reforms in the Defence Sector

• Liberalized FDI Policy:

• FDI Limit: Increased to 74% (Automatic Route) and up to 100% (Government Route) for companies introducing modern technology.

• Domestic Procurement Prioritized:

• Initiatives like Make in India and Defence Acquisition Procedure (DAP) 2020 promote self-reliance.

• 2025 is declared as the ‘Year of Reforms’ for defence.

• Simplified Licensing:

• Extended validity periods for industrial licensing.

• iDEX Scheme:

• Encourages startups and MSMEs to participate in defence innovation.

• Indigenization Portal (SRIJAN):

• Facilitates collaboration between Indian industries and MSMEs for defence production.

• Defence Industrial Corridors:

• Established in Uttar Pradesh and Tamil Nadu to boost manufacturing.

• Private Sector Participation:

• Companies like Larsen & Toubro, Tata Advanced Systems, and Mahindra Defence Systems are strengthening the defence ecosystem.

• Modernization of Armed Forces

• Army: Induction of Pinaka rocket launchers, Arjun Mark 1A tanks, and advanced rifles.

• Air Force: Adoption of Tejas LCA and procurement of Rafale jets.

• Development of the Advanced Medium Combat Aircraft (AMCA) for fifth-generation capabilities.

• Navy: Focus on indigenous platforms like INS Vikrant, INS Arighaat, and INS Tushil. Expansion under Project 75 and 75(I) for advanced submarines.

• Missile Systems: Development of BrahMos supersonic cruise missile and Akash SAM systems.

• Emerging Technologies: Integration of AI, cybersecurity, space-based assets, and quantum computing.

• DRDO’s focus is on unmanned systems, swarm drones, and hypersonic technology.

Opportunities in Defence Manufacturing

• Indigenization: 75% of the defence capital procurement budget in FY24 is allocated for indigenous sources.

• Modernization: Planned expenditure of $130 billion on fleet modernization in the next 5–7 years.

• Cost Savings: Lower manufacturing costs in India compared to Europe/North America.

• Strong Supply Chain: Over 350 major manufacturers and 10,000 MSMEs collaborate in the sector.

Key Challenges

• Dependence on State-Owned Enterprises: Public sector undertakings dominate defence production (~85% of output), limiting private sector efficiency.

• Indigenous Technology Development: Projects like the Kaveri engine highlight challenges in achieving advanced military technology.

• Slow Modernization: Delays in technological upgrades and procurement processes.

• Export Controls: Geopolitical complexities, such as Indian ammunition in unintended conflict zones (e.g., Ukraine), require careful navigation.

• Strategic Balancing: Partnerships with the USA, France, and Russia must be balanced with maintaining strategic autonomy.

• Bureaucratic Hurdles: Persistent delays in approvals and lack of inter-agency coordination.

Future Vision

• Global Ambitions: Establishing the Bharatiya Antariksh Station (BAS) by 2035 and achieving an Indian Crewed Lunar Landing by 2040.

• Advanced Launch Vehicles: Development of next-generation systems for the future battlefield.

• Enhanced Manufacturing: Expanding capabilities of industrial corridors and private sector participation.

Conclusion

• India’s defence sector is on a transformative path, marked by its pursuit of self-reliance, modernization, and global collaboration. While challenges such as technological hurdles and bureaucratic inefficiencies persist, India’s trajectory towards becoming a global defence manufacturing hub is clear. Continued reforms, enhanced private sector involvement, and strategic partnerships will strengthen India’s national security and solidify its role in the global defence landscape.