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India’s Growing Importance in the Global Defence Sector

29 May 2023

Indian defence and aerospace Industry eco-system is on the cusp of a transformation to rightfully claim its place among global industries. The Indian defence Industry has already undergone several structural changes in its ecosystem, with a shift from a largely import-dependent to a globally competitive Industry. The policy framework implemented by the Government over the last decade has encouraged and facilitated the Indian industries to design, develop, and manufacture all types of military systems and platforms. It has also encouraged collaboration with foreign industries to undertake co-development, share technologies, and manufacture in India, both to meet India’s own needs and for exports.

The export orientation of the Indian defence Industry during the last five years has yielded encouraging outcomes. From a meager Rs 1,521 crore in 2016-2017, the country’s defence exports have grown tenfold to Rs 15,921 crore in 2022-2023, with a major contribution from private industries. This impressive growth can be credited to the Government’s path-breaking reforms, in line with the ‘Aatmanirbhar Bharat’ initiative, and the industry’s resilience. The need for export competitiveness of the Indian defence Industry will ensure technology insertion, technology development, and the adoption of modern manufacturing practices.

Today, India has become a partner of choice for several countries. We are exporting a wide range of military hardware including simulators, drones, counter-drone systems, protective gears, missiles, arms, and ammunition. CII and Society of Indian Defence Manufacturers (SIDM) have been proactive and instrumental in shaping change at the policy and procedural level since the 1990s and have actively worked towards building capacity and capability of the domestic Industry.

The growth trajectory and success of the Indian defence sector mirror that of several other industries in the past – IT, automobiles, and pharmaceuticals, to name a few. India’s standing as a global leader in these industries is due to its commitment to innovation, technological advancement, and entrepreneurship spirit of Indian businesses.

In the past eight years, significant emphasis has been placed on indigenising defence production and taking the domestic aerospace and defence Industry to the next level of capability, capacity, and growth. As the Indian Government and the Industry work collaboratively to achieve the export target of Rs 35,000 crore by 2025, it is pertinent that our focus shifts from substituting imports and reverse-engineering to technology development. For any Industry to become a global leader, it is imperative to have major platforms and systems, as well as components and sub-systems, with a fully Indian DNA. They should be designed, developed, manufactured, and subsequently maintained and repaired within India. This will create numerous job opportunities, help our Armed Forces to be fully self-reliant and give them an operational edge and ultimately boost our exports as well.

Today, India engages in military domain with several nations across the world, at both the Government and Industry levels, via joint military exercises, joint working groups, technology collaborations, joint ventures, and information sharing, among other activities. In addition to the existing level of cooperation, the evolving geopolitical situation, including the growing challenges in the Indo-Pacific region, and competition in new frontiers of the defence domain, such as space, are creating new avenues for cooperation. We must explore opportunities for technological cooperation with friendly foreign countries in domains like artificial intelligence, space, underwater technologies, unmanned technologies, and cybersecurity.

During CII’s recent delegations to the US and France, it was clear that defence cooperation is increasingly emerging as a key pillar of our strategic relations with foreign governments. SIDM, an offshoot of CII, has been doing great work in integrating the Indian defence Industry with the global market, be it via supply chain workshops with leading foreign original equipment manufacturers (FOEMs) or facilitating direct interactions with the Government and Armed Forces of foreign governments. In the past year itself, SIDM has facilitated the Industry’s interaction with over twenty-five countries. 

India’s growing importance in the global defence sector is a testament to its ability to transform and compete on the global stage. I am certain that the Government will continue to promote and facilitate the Indian defence Industry to gain a share in the global defence market. I am confident that India will continue to be a key player in the defence sector and look forward to seeing the sector’s continued growth and success.

The article was first published in the May 2023 issue of CII Policy Watch, focused on the defence sector.

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