Since Independence, right until the Kargil War, India has fought many wars. The ‘two-front threat’
safeguarding our borders from the notorious neighbors to the North and West is still a reality. Taking
into consideration this threat, it is pertinent for India to ensure self-reliance and strategic autonomy
for national security.
From Cannons to Drones – Evolution of Defence Manufacturing
At Independence, India inherited 18 ordinance factories and few Defence Public Sector Units
(DPSUs) from the British. Over the years, additional factories were built but the sector was under the
tight control of the public sector.
Decades after liberalization in 1991, the defence manufacturing sector was opened to private
players. But, for years India relied on imports with Russia being the largest arms supplier from 2002
to 2014 when it peaked at about $4 billion.
However, initiatives like Make in India are shifting the focus towards indigenous manufacturing.
Early Indigenization Efforts
Projects like Light Combat Aircraft (LCA) Tejas and the Integrated Guided Missile Development
Program (IGMDP) were ambitious steps towards self-reliance. Although these highlighted India’s
dependence on global technologies challenges of limited private participation, they offered
credibility as a mission-capable country.
Policy Push for Indigenization
During the last decade India has witnessed a remarkable transformation:
- Defence Production: In 2023 – 24 India’s production reached ₹1.27 lakh crores, which is a 174% rise since 2014 – 15
- Indigenous Contracts: Out of 193 contracts signed in 2024 – 2025, 177 were awarded to domestic companies
- iDEX: Since 2018, iDEX has fostered innovation through grants to MSMEs and startups developing cutting-edge defence solutions
- Liberalized FDI Policy: Since 2020, up to 74% FDI is allowed through the automatic route attracting global collaborations
- Defence Testing Infrastructure Scheme (DTIS): Schemes like DTIS are helping build certification and testing facilities across India
State-owned enterprises like BEL, HAL, and MDL still play a crucial role with projects like Tejas fighter
jets, Dhruv helicopters, and advanced naval platforms. However, their role is evolving from
monopolies to strategic partnerships.
Simultaneously, private participation in defence manufacturing is rising. L&T Defence is contributing
aerospace and missile systems. Tata Advanced Systems Limited is collaborating with Airbus for
producing C-295 aircrafts.
Persistent Challenges
Despite policy reforms and increased private participation, defence manufacturing continues to face some challenges:
- Ease of Doing Business: Land acquisition, infrastructure gaps, and regulatory overlaps continue to pose hurdles
- Limited R&D Spending: Only 5.5% to 6.5% of defence expenditure is spent on R&D, which is significantly blow global benchmarks
- Raw Materials Dependency: Failures like Kaveri engines underline the need for robust PPP models in core technologies
- Procurement Delays: Long procurement cycles impact execution of projects and investor confidence
Our country’s path to become a global defence manufacturing hub lies in:
- Increasing private sector participation via tax incentives, quicker approvals, and access to capital
- Expanding indigenous manufacturing infrastructure in corridors in UP and Tamil Nadu
- Developing robust supply chains to empower local suppliers to reduce global dependence
- Aggressive investments in R&D to bridge technical gaps
The Indian defence manufacturing sector has transitioned from careful beginnings to bold strides.
Initiatives like iDEX, Defence Corridors, and Positive Indigenous Lists are positive steps to make the
sector future-ready. Although there are challenges, India is slowly moving towards self-reliance.
It is more than building weapons. It is about developing confidence, global stature, and resilience.
With sustained government support, private participation, and innovation, our nation is not only
securing the borders but shaping up as formidable defence hub on the global stage.
If you want to explore how to take advantage of the burgeoning defence manufacturing ecosystem,
drop a mail on info@greenvissage.com or call on +91 8237857853