India’s defence industry: Achievements and challenges

Prime Minister (PM) Narendra Modi's government has launched many reforms under the Make in India and Atmanirbhar Bharat initiatives to strengthen India’s moribund defence industry. These reforms have led to some visible improvements, as evidenced by increased defence production and exports, and a large bank of in-principle government approvals for future domestic production. However, several challenges persist that require urgent attention. In particular, efforts must be made to scale up defence production to at least match the procurement budget of the armed forces to minimise direct imports. The research and development capacity of the industry needs significant improvement to reduce the dependence on external sources for technology and input materials. The government must also expedite its procurement decision-making cycle to quickly translate the reform measures into actual production and delivery.

Since assuming power in 2014, PM Modi’s government has made a determined attempt to strengthen the Indian arms industry and transform the country’s image from the world’s largest arms importer to a major exporter of defence equipment. To realise this goal, the government has announced many reform measures under the Make in India initiative and Atmanirbhar Bharat Abhiyan (self-reliant India mission). These measures cover virtually every facet of the Indian defence economy, spanning structures, acquisition processes, industrial regulations, and budgetary provisions. The government is optimistic that the reform measures will act as a catalyst and help the domestic industry meet the government’s vision of achieving a production target of ₹1,750 billion ($26 billion)—including exports of ₹350 billion ($5 billion)—by 2025. 

This issue brief examines the performance of the Indian defence industry by assessing the key reform measures announced over the past decade. It also assesses the significant challenges the Indian defence industry faces on its path towards self-reliance. Essentially, it seeks to answer two crucial questions: To what extent has the government’s goal been realised? What are the challenges facing the Indian arms industry, which has historically been considered a laggard?

The paper can be accessed by clicking here.

This article is authored by Laxman Kumar Behera, ORF.