The "Make in India" initiative has been instrumental in transforming India's defence sector, with private firms playing a pivotal role in this shift. Since the defence industry was opened to private participation in 2001, the sector has seen significant growth, especially after the launch of "Make in India" in 2014.

Today, private companies account for about 20% of India's total defence production and contribute substantially to its defence exports.

Major private players like L&T Defence, TATA Advanced Systems, Bharat Forge, and Adani Defence are increasingly involved in high-value defence contracts, including components for fighter jets, missile systems, and unmanned aerial vehicles (UAVs).

The government's policies, such as the Defence Production Policy 2020 and the iDEX initiative, have further boosted private sector involvement by encouraging innovation and collaboration with the armed forces.

The Strategic Partnership model and the Make-II framework have also facilitated private firms in manufacturing critical platforms like submarines and helicopters in collaboration with global defence majors.

Furthermore, the government's decision to reserve a significant portion of the defence acquisition budget for local companies has provided a strong impetus to private sector growth.

India's defence exports have surged, crossing ₹20,000 crore in FY 2024, with a target to reach $5 billion by 2025.

The private sector's role in achieving this target will be crucial, especially through partnerships with foreign OEMs.

Furthermore, initiatives like iDEX have fostered innovation among start-ups and MSMEs, contributing to the development of home-grown technologies in areas such as hypersonic weapons and cybersecurity.

Challenges Private Firms Face In The 'Make In India' Defence Initiative

Private firms in India's defence sector face several key challenges as they participate in the "Make in India" initiative:

There is a historical mistrust among government decision-makers regarding the capability of private firms to handle large-scale defence projects. This mistrust often leads to a preference for public sector units (PSUs) over private companies for major contracts.

The defence procurement process is complex and lengthy, which can deter new entrants. The procedures often favour established public sector companies, making it difficult for private firms to navigate and secure contracts.

Private companies face an uneven playing field compared to PSUs. PSUs often have easier access to government funding and infrastructure, which allows them to underquote prices for contracts. This makes it challenging for private firms to compete on price.

Despite efforts to indigenise defence production, private firms often rely heavily on foreign technology and components. This limits the value addition within India and hampers the development of indigenous capabilities.

There is a lack of emphasis on research and development (R&D) within the private sector, which is crucial for developing advanced defence technologies and achieving self-reliance.

Global supply chain disruptions, such as semiconductor shortages, can impact the production of defence equipment, further complicating the challenges faced by private firms.

India's defence offset policy and FDI caps can discourage foreign investment and technology transfer, limiting the growth of private firms in the sector.

Start-Ups Contributing To India's Defence Manufacturing Sector

Start-Ups are significantly contributing to India's defence manufacturing sector by driving innovation and reducing the country's dependence on foreign defence imports. Here are some key ways in which start-ups are impacting this sector:

Start-Ups are leveraging emerging technologies like artificial intelligence (AI), unmanned systems, and advanced surveillance to develop cutting-edge defence solutions. For instance, companies like Big Bang Boom Solutions are working on situational awareness systems for armoured vehicles, while Optimised Electro-Tech specialises in multispectral imaging and night-vision weapon sights.

By focusing on indigenous manufacturing, start-ups are helping India achieve its goal of self-reliance in defence production. Initiatives like the Innovations for Defence Excellence (iDEX) program provide a platform for start-ups to collaborate with the defence forces, accelerating the integration of innovative technologies into India's defence capabilities.

Start-Ups are also contributing to India's defence exports, which have gained prominence globally. The government's export promotion measures have facilitated collaborations with foreign partners, enabling Indian start-ups to showcase their capabilities on the global stage.

The agility and adaptability of start-ups allow them to set up flexible manufacturing plants, which can produce specialized components or cater to emerging defence needs with shorter lead times. This flexibility is crucial for addressing supply chain challenges and streamlining processes in defence manufacturing.

The government's initiatives, such as de-licensing, deregulation, and liberalization of foreign investments, have created a conducive environment for start-ups to thrive. Schemes like iDEX and the Technology Development Fund (TDF) provide financial support and resources to start-ups, fostering a culture of innovation and research.

The private sector's increasing involvement is driving India's journey towards self-reliance in defence manufacturing, aligning with the broader vision of "Atmanirbhar Bharat".

IDN