Self Reliance in Defence Production: Strategic Autonomy in National Security


The Indian Security Apparatus operates in an atmosphere of external belligerence and internal dissonance. India has been engaged in an ongoing war brought on by state sponsored terrorism. While she must prevail over this threat, she must invest in building long term capability for application of decisive military power. Capability takes years to build and is the primary driver of intent. Capability Development is a result of prolonged perseverance and follows a linear and predictable trajectory. Intent is dynamic, disruptive and could change overnight.

True capability rests on multiple factors such as dynamic policy, sound planning, efficient processes, and a credible technology and defence manufacturing base. A strong, well-articulated policy is important to address the concerns of all stakeholders and lay foundation for a robust defence eco system. This is the crux and indeed the soul of Make in India vision for the Defence Sector.

The Defence Sector has shown good growth in the recent years and is heralded as the sunshine sector of the Indian economy. However, unlike other vehicles for economic growth, defence sector is highly regulated, technology intensive and has huge entry barriers. The vastly complex contours of building defence capabilities and the restricted information available in the public domain leads to varying viewpoints on the success of the Make in India initiative. To comprehend the effort of synergizing the stakeholders it is important to realise the magnitude of change required in all aspects of policy, process, production, and business.

The Context

The economic payoffs of a well-developed Military Industrial Complex can be gauged from the fact that even today, more than 85 percent of Global Arms trade is shared between the major Allies and the Axes powers of the Second World War. That the Defence Enterprise, setup more than 80 years ago continues to dominate and drive the global defence and security business underscores the need for a persistent and a long-term approach.

Till a few years ago, India was one of the largest importers of weapons and defence equipment. The govt push towards an Atmanirbhar Bharat in Defence Sector over the last 10 years has unleashed a slew of policy & process initiatives to promote a vibrant and efficient defence industrial base in the country. In addition, the rapidly changing global security environment too has created a major turbulence in existing supply chains which opens up unprecedented opportunities in a constantly evolving security matrix.

Make in India vs Atmanirbhar

Nurturing a Defence Industrial Base (DIB) is a long drawn and complex exercise. It requires resolute and constant evolution of policy, re-calibration of planning, re-purposing of resources, revision of existing processes and re-alignment of existing material and technology supply chains. Multiple stakeholders with varying concerns and perceptions drive the entire system which often results in systemic lethargy and disrupts the smooth interplay between the technology, production, and induction cycles.

First Phase – Make in India. Moving from a largely import equipped force to an indigenous military, required an approach which was well calibrated to ensure that there is no abrupt disruption of operational capability and change is introduced in a graduated manner. The first step was to identify critical gaps in our capacities and introduce such reforms at the policy level which would unshackle the hegemony of established sources for defence equipment. Aspects such as increasing the indigenous content progressively and introducing new acquisition categories which favored manufacture in India were promulgated. This was the first phase which focused on localization of manufacture by creating an enabling environment through geographic contiguity and financial incentives. Various initiatives like creating Defence Corridors, enhancing the scope of Defence Offsets, and offering government infrastructure to the private sector for testing and evaluation were efforts to encourage Make in India in the Defence Sector.

This phase roughly aligned with the time period of 2014 to 2019, which saw a rapid growth of defence manufacture in India as Foreign OEMs setup joint ventures with Indian firms to take advantage of the favorable government policy and the low cost of labour and infrastructure which helped them retain competitive edge in the global market. Apart from encouraging Make (Manufacture) in India, a conscious effort was made to bring in accountability and speed in government procurement. Shorter procurement timelines and a genuine intent in indigenization spurred the greenshoots of the Indian Defence Industry.

The Atmanirbhar Push. From 2019 onwards concerted lines of effort were initiated by the government to create a Make in India Defence Enterprise. Strategic autonomy in our defence and security capability was the intended goal. This required accelerating policy changes to allow Preferential Consumer Access to Indian vendors, raising Entry Barriers for foreign OEMs where Indian alternatives existed, redefining the Defence Acquisition Procedures further, creating mentorship and facilitation organisations at all levels, introducing flexible evaluation systems and above all catalyzing a defence technology and innovation architecture through startups and technology development initiatives. The focus now shifted from mere manufacture to creating value in the country through building technology blocks, fueling innovation and strengthening the scouting and mentoring architecture.

This commenced an irreversible process of creating an indigenous ecosystem for defence technologies, defence manufacture and testing and evaluation as a converging continuum towards building a strategic autonomy in defence. Each facet had its own peculiarities and challenges which defined the spirit and trajectory of its progress. Limited technological thresholds, sustainability of business, global linkages of Indian Defence OEMs and lack of coordination amongst the stakeholders need to be addressed further to ensure that the process of Atmanirbhar Bharat in Defence is further consolidated.

Building the Technology Base

Defence technologies are niche and closely guarded. These technologies take years of effort and a huge R&D budget to realise. Once achieved, these are even harder to protect and convert into decisive military power. The entire gamut of nurturing, incubating, ringfencing and operationalizing these technologies, developing defence designs, and creating IPRs in public and private sector needs a comprehensive approach.

Leveraging Technology will be a key determinant in future warfare. Strong economies can afford cutting edge technologies to maintain decisive capabilities. Investments in Defence R&D provide substantial and often decisive advantages both in security of the nation and in creating a Defence Enterprise. Although ample talent and capacities exist within the country both for defence research and defence manufacture, our expenditure on Defence R&D needs to be substantially increased to create a foundation for new and improved technologies that underpin a wide range of security applications. India’s expenditure on Defence R&D is a mere 0.2 percent of the global spend which is significantly low compared to many other countries.

The financial risk of building defence technologies is normally borne by the government. This would involve investment in state-of-art infrastructure, acquisition of the best available talent and initiation of value driven projects. While the Public R&D Institutions like the DRDO give relative financial comfort to the Govt, the Private Sector needs to be equally supported as it has access to the best talent and can infuse a much-needed vibrance and urgency in the process. The recent initiative of GoI to fund Defence R&D in the private sector comes with its own set of challenges and opportunities. Implementing this vision of the GoI through smart policy intervention and positive interpretation of the provisions is critical to creating a robust technology base.

The Defence Startup Eco-system exploded with the introduction of the iDex scheme in 2019. An innovative program modelled on the US Defence Innovation Unit (DIU); it has successfully harnessed the unique ability of the Indian mind to innovate and optimize costs. The scheme has funded more than 430 Startups and more than a dozen of these have successfully developed and supplied niche products to the Indian MoD. Recognizing the potential of the scheme, the Indo-US collaboration between DIU and the iDeX called INDUS-X was launched in November 2023.

Defence Manufacture

The Indian defence manufacturing sector is a significant part of the economy. It has grown at a CAGR of 13.4 percent in the past five years and the defence production crossed Rs 1 lakh crore in 2022-23. This growth has been inclusive and collaborative. The Government of India has earmarked 68 percent of defence acquisition budget for the Indian Industry and only a maximum of 32 percent of funds can be used for foreign sourcing. Within the 68 percent budget available for indigenous sources, Rs 1500 crore has been earmarked for procurement from the MSME and the Startups. Furthermore, 25 percent of this domestic capital procurement budget amounting to approximately Rs 22000/- Cr has been earmarked for domestic private industry.

To widen the manufacturing base, more than 600 defence industrial licenses have been issued to 369 companies operating in the defence sector. Five positive indigenization lists have been issued by the Ministry of Defence banning import of more than 830 items and the DPSUs have listed out more than 46000 items for being sourced from indigenous suppliers.

Two Defence Industrial Corridors have been established in Uttar Pradesh and Tamil Nadu to create geographically contiguous defence manufacture hubs. Various subsidies and incentives have been offered for setting up industry and testing and evaluation infrastructure in these corridors. In addition to these defence and aerospace hubs and corridors, technology parks are being set up for development and production of niche products like communication systems, drones, and ammunition.

Defence Exports play a vital role in creating sustainable business. The Government has set an ambitious target of achieving Rs 35000/- Cr worth of defence exports by 2025. Though the target remains elusive, our defence exports have grown at a staggering 334 percent over the last five years and today we export defence equipment to over 75 countries.

Numerous process reforms have also been initiated for hastening the procurement process. This has led to convergence and efficiency amongst all stakeholders the results of which are tangible. A sharper focus and a decisive shift in mindsets by all functionaries would certainly further enhance efficiencies as essential all policies and processes are ultimately driven by empowered functionaries.

In Conclusion

The last ten years have been path defining for the Indian Defence Industry. Focused reforms to support and mentor the Indian defence eco-system, create sound and sustainable business cases, provide subsidies and incentives to make Indian products globally competitive and use military diplomacy to position these in global supply chains has significantly altered the defence capability landscape of the country. However, since the global security scenario is dynamic and disruptive, these initiatives need to be broadened and deepened further.

Defence industrial complexes take years of national effort to realise. Often, the challenge comes from established sources which will create regulatory, legal, and financial barriers to the process through denial or disruptive business practices. To prevail over these challenges, support from own military is essential as they are the biggest ambassadors of the defence industrial capability of the nation.


Maj Gen AK Channan is a distinguished Artillery Officer. He has been involved in the Make in India (Defence) initiative since 2012 and has conceptualized and raised the Army Design Bureau for the Indian Army. The officer writes and regularly speaks at Army War College, CDM Secunderabad, and the NDC on Make in India in Defence.


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