Harnessing Indigenous Capabilities: The Growth of India’s Defence Sector

09 Jun 2023

Buoyed by the ‘Make in India’ and ‘Aatmanirbhar Bharat Abhiyan’, the Indian defence Industry ecosystem is in a critical orbit in its trajectory towards realising the goal of self-reliance in defence production. Active efforts are being taken for indigenising the defence modernization while concurrently establishing brand India in the global defence Industry by direct exports of cost-efficient indigenous equipment and systems to deliver performance and frugality through innovation. 

Since the opening of the sector for private participation in 2001, and the promulgation of the Defence Procurement Procedure, every aspect of the Indian defence sector – be it policy, organization, procedure, or stakeholders’ approach – has evolved to indigenise the defence sector. Over the past few years, it has advanced further and become the overarching narrative of ‘Make in India, for the World’. 

Themes such as ease of doing business, prioritization of Indigenous Design, Development, and Manufacture (IDDM) of all types of military equipment and other indigenous procurements are providing impetus to domestic manufacturing. In the past 8-10 years, the Government has taken a focused approach towards getting the Indian Industry integrated in the global defence supply chain to ensure the viability and sustainable growth of our industrial ecosystem. While much has been achieved across the value chain, there is much more which remains to be done to become ‘self-reliant’ in this strategic sector and advance India’s significance as a geopolitical player via defence diplomacy. 

Today, the Indian defence Industry manufactures several state-of-art defence goods and exports to over 85 countries. The recently achieved all-time high figure of ~ Rs 16,000 crore is very commendable and a huge win for the Industry and the Government. In the Industry, we are certain that we shall be able to reach and even surpass the Rs 35,000 crore defence exports target set for 2025, by our Hon’ble Prime Minister. 

Our country’s defence export basket currently comprises electronic warfare systems, protective gear, arms, ammunition, military vehicles, communication, optronics equipment, anti-drone systems, simulators, rocket launchers, and several other hi-tech military items. It is indeed a matter of pride that indigenously developed armoured vehicles, supersonic missile Brahmos, air defence system Akash, indigenous 4th gen fighter aircraft LCA Tejas, and several other weapon systems have attracted interest from many friendly foreign countries.

It is even more noteworthy that the Indian private industries now stand shoulder to shoulder with their public sector counterparts when it comes to capability and competitiveness for design and manufacturing of defence equipment. An Indian private entity has bagged a contract to supply 155 mm artillery guns to an European Union (EU) nation from a competition that involved the global best while another company’s armoured vehicles are saving the lives of UN Peacekeepers. The industry would like to acknowledge that this is a result of the Government’s enabling policies and procedures that have contributed significantly towards maturing the Indian Industry’s capabilities. It is reckoned that offsets constitute a significant part of export revenue. It is also significant to note that nearly 85 per cent of export revenue is contributed by the private sector. 

Currently, India is being seen as a market with huge growth potential, because of which several foreign original equipment manufacturers (FOEMs) and foreign governments are actively looking to collaborate with Indian partners. The ~ 48 joint ventures between global original equipment manufacturers (OEMs) and Indian industries are a testament of both – the Indian Industry’s credible capabilities and the FOEMs’ appreciation of the Indian Government’s unwavering Industry-focused policies. 

Society of Indian Defence Manufacturers (SIDM), being the country’s sole Industry association for the aerospace and defence sector, has remained right at the epicenter, with the Ministry of Defence, for promoting the Indian Industry’s capabilities at the global stage. SIDM has worked hand-in-hand with both the Industry and the Ministry to create a more enabling environment and finding new markets for the domestic Industry via export promotion webinars, hosting senior delegations from our friendly foreign countries, taking Industry delegations to other countries, hosting supply chain conferences with leading FOEMs for integration of Indian MSMEs into the global supply chains, sharing export leads among other activities. 

In just the past year, SIDM has engaged with over twenty countries, including the United States, France, UK, Kenya, Egypt, Australia, Japan, South Korea, Seychelles, Mauritius, Russia, Sri Lanka, Ecuador, and Jordan. SIDM has worked actively with not just the Ministry but also the Defence Attachés, both Indian and foreign, to find new avenues for our Industry to sell as well as collaborate. Apart from signing MOUs with the defence Industry associations of foreign countries to facilitate regular B2B interactions, SIDM has also mounted several delegations to foreign countries as part of the bilateral G2G for defence cooperation. 

The industry is enthusiastic and positive that the collaborative efforts of the Government, Armed Forces, and the Industry shall lead to the building of a technologically advanced and competitive defence Industry ecosystem in India. This ecosystem shall be capable of fulfilling all present and future capability requirements of our own Armed Forces, as well as those of many of our friendly foreign nations.

This article was contributed by Mr SP Shukla, President, SIDM and Chairman, Mahindra Defence & Aerospace. It was first published in the May 2023 edition of CII Policy Watch focused on the defence sector.

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