Continuous reforms and innovation remain paramount as security challenges keep evolving

New Delhi — A big boost. Following policy changes, defence manufacturing underwent a change for the better, as obsolete armaments were replaced with weapons that leveraged niche tech

In India’s military history, the period 2014 to 2024 stands as a decade of significant transformation. During these years, India underwent a fundamental shift in its approach to defence manufacturing, marking a departure from the hesitancy and dependency of the pre-2014 era.

The Modi government’s push for Aatmanirbharta initiated a series of reforms in the defence sector. This gained further momentum following a stand-off with China in 2020 and growing global insecurities, first due to the Russia-Ukraine war and later due to Israel-Hamas conflict. These events reinforced the government’s resolve to strengthen India’s self-reliance in defence.

Tweaking of Defence Procurement Procedure in 2016, and replacing it with the improved Defence Acquisition Procedure 2020 was aimed at increasing private industry participation, encouraging indigenous design, development and manufacturing of defence equipment.

The aerospace and defence are a ₹80,000-crore industry in India, per an MoD estimate. The private sector’s contribution has steadily grown to ₹17,000 crore. According to the MoD, 86 capital acquisition proposals worth ₹93,727 crore have been categorised under Buy (Indian-IDDM) category in the last four financial years alone — from 2016-17 to 2019-20.

FDI Flows

The government also promulgated positive indigenisation lists to curb the import of spares, assemblies, components and sub-systems. On the other hand, FDI in the defence sector has been enhanced, which resulted in the inflow going up to ₹2,871 crore post 2014 compared to ₹1,320 crore a decade ago.

Following these changes, defence manufacturing replaced obsolete armaments with niche technologies and fostered collaboration between vendors and consumers. Procedural support to local supplies was also appended to the public procurement order. Another green shoot was the sprouting of start-ups, unthinkable in the past due to financial constraints. Now there are thousands of start-ups in the defence and space verticals, with some of them showing potential to eventually grow into the next generation corporate giants.

Schemes like Innovation for Defence Excellence (iDEX), Acing Development of Innovative Technologies with iDEX (ADITI) and India US Defence Acceleration Ecosystem (INDUS-X) to build a defence innovation bridge between the two countries under the initiative on Critical and Emerging Technology (iCET) paved the way for vibrant innovations in the sector.

The MoD also brought in structural reforms by creating the post of Chief of Defence Staff to head the three armed forces, and the Department of Military Affairs for optimal utilisation of resources and promote jointness among the tri-services.

The government’s defence budgetary support has gone up slightly, though it may not be enough to meet the demands of forces.

Growing Exports

The government effort is manifested in the defence exports touching a record high of ₹21,083 crore (approx. $2.63 billion) in the FY 2023-24 — a growth of 32.5 per cent over the last fiscal when the figure was ₹15,920 crore. The recent figures indicate that the defence exports have grown 31 times in the last 10 years compared to FY2013-14, the Ministry said recently.

India has supplied rocket systems to Armenia and BrahMos missiles to the Philippines and many other countries are showing interest in buying other weapon systems. There are not just encouraging signs of the global community beginning to accept Indian defence products but a politico-defence statement that the government will not shy away from supplying arms and ammunitions to friendly countries. To lend energy to defence exports, the government is also indulging in active military diplomacy, increasing the presence of Defence Attaches in Africa, Philippines, Armenia and Poland.

Notwithstanding the achievements, the government defence architecture still remains disjointed and its adaptability response is slow.

There is a pressing need for Defence Reform 2.0 to address these hurdles and unleash the full potential in this sector.

(With Agency Inputs)