Make in India in defence sector: Challenges, bottlenecks, and the way forward

Background and Context

India has historically depended heavily on foreign countries for defence equipment. After Independence, India initially imported defence equipment from the United Kingdom and later from the Soviet Union. Over time, the United States and Israel also became important defence suppliers.

India has developed the capacity to procure and assemble several defence platforms. However, it still faces difficulties in producing highly advanced systems such as jet engines, sophisticated drones, advanced sensors and next-generation warfare technologies.

The changing nature of war has made defence self-reliance more important. Current global conflicts show that wars are no longer fought only with tanks, aircraft and missiles. Drones, sensors, artificial intelligence, cyber tools, precision weapons and counter-drone systems are becoming equally important.

Present Status of India’s Defence Manufacturing

India has taken several steps to promote defence manufacturing. These include encouraging private sector participation, liberalising FDI, promoting defence corridors and transferring DRDO technologies to industries.

However, India continues to remain among the major arms importers in the world. This shows that domestic defence production has improved, but it has not yet fully replaced import dependence.

Defence manufacturing in India is still dominated by Defence Public Sector Undertakings (DPSUs). According to the article, DPSUs account for more than 70% of total defence manufacturing. This limits wider private sector participation.

Challenges and Bottlenecks

1. Heavy Dependence on Imports

India depends on imports due to domestic technological limitations and budgetary constraints. This dependence is most visible in high-end platforms and advanced technologies such as:

• Jet engines
• Sophisticated drones
• Advanced sensors
• High-end electronic warfare systems
• Modern air defence technologies

This creates strategic vulnerability during wars or global crises.

2. Over-Centralised Defence Acquisition Process

India’s defence acquisition system is highly centralised and layered. The armed forces first identify their needs through Quantitative Requirements (QRs), which specify the technical and operational features of equipment.

However, these QRs are often ambiguous or too rigid. This leads to delays in procurement and manufacturing.

3. Delay in Defence Projects

The Parliamentary Standing Committee of the Ministry of Defence observed that many defence projects have faced serious delays. Out of 178 projects, original timelines were not followed in 119 cases. In some cases, delays ranged from 16% to 500% beyond the agreed timeline.

Such delays weaken military preparedness and increase costs.

4. Multiple Layers of Approval

Defence procurement passes through many official layers. Overlapping approvals, file movement and prolonged decision-making slow down the process.

This makes defence production less efficient and discourages private companies from entering the sector.

5. Limited Technical Talent in Public Institutions

Government-owned defence institutions often face difficulty in attracting and retaining top engineering and scientific talent. One major reason is the relatively low compensation structure compared to private industry and developed countries.

For advanced defence production, India needs highly skilled scientists, engineers and technicians.

6. Weak Technology Transfer

Foreign defence companies may form joint ventures with Indian companies, but meaningful transfer of high-end technology remains limited. Often, India receives assembly or production rights, but not the core technology.

This prevents India from becoming truly self-reliant.

7. Unequal Playing Field for Private Sector

Private defence firms face several challenges such as:

• Preferential treatment to DPSUs
• Complex documentation requirements
• Delayed payments
• Limited role in procurement decision-making
• Lower trust compared to public sector units

This reduces private sector enthusiasm and investment in defence manufacturing.

Lessons from Current Global Conflicts

Recent conflicts in Ukraine, Gaza, Lebanon and Iran-related regional tensions show that modern warfare is changing rapidly.

1. Drones Have Become Game-Changers

In Ukraine and West Asia, low-cost drones have damaged military assets and critical infrastructure. This shows that even relatively inexpensive technologies can create major battlefield impact.

For India, investment in UAVs, counter-UAV systems and autonomous platforms is essential.

2. Wars Are Becoming Technology-Driven

Modern wars are not only about large armies. They depend on:

• Sensors
• Artificial intelligence
• Precision weapons
• Missile defence
• Cyber systems
• Space-based surveillance
• Electronic warfare

India must invest in these areas to remain prepared.

3. Supply Chains Can Be Disrupted

In times of war, global supply chains may be disturbed. Countries may delay or deny defence supplies due to diplomatic pressure, sanctions or strategic interests.

Therefore, India must reduce dependence on foreign military suppliers.

4. Element of Surprise Remains Important

Defence Minister Rajnath Singh highlighted that the side which has the element of surprise often gains a decisive advantage in war.

This requires strong research, innovation and rapid deployment of new technologies.

5. Civilian Technologies Can Become Weapons

Recent pager attacks in West Asia show that ordinary technologies can be weaponised. This means India must prepare for hybrid threats, cyber risks and unconventional warfare.

Role of Private Sector in Defence Manufacturing

The private sector can play a major role in making India self-reliant in defence production.

1. Innovation and Advanced Manufacturing

Private companies can bring innovation, speed and efficiency. They can contribute to drones, robotics, artificial intelligence, sensors, cyber systems and electronic warfare.

2. Collaboration with Foreign OEMs

Under the Strategic Partnership Model, Indian private firms can work with foreign Original Equipment Manufacturers. This can help in producing submarines, helicopters, fighter aircraft and other major platforms in India.

3. Support to Start-ups and MSMEs

Start-ups and MSMEs can contribute to niche technologies such as:

• Drone components
• AI-based battlefield tools
• Communication systems
• Robotics
• Surveillance devices
• Counter-drone systems

They can make the defence ecosystem more flexible and innovative.

4. Competition with DPSUs

A fair competition between DPSUs and private companies can improve quality, reduce costs and speed up production.

India should not choose only public or only private manufacturing. It needs a hybrid model where both public and private sectors work together.

Government Initiatives

1. Make in India in Defence

The government has promoted domestic manufacturing of defence equipment to reduce imports and improve self-reliance.

2. Strategic Partnership Model

This model allows Indian private firms to partner with foreign OEMs for manufacturing major defence platforms in India.

3. Liberalisation of FDI

FDI in defence was increased from 24% to 49% in 2016 and further to 74% under the automatic route in 2020. This aims to attract foreign investment and technology partnerships.

4. DRDO Technology Transfer

The government has waived the earlier 20% Transfer of Technology fee for development-cum-production partners, development partners and production agencies.

According to the article, DRDO has transferred over 2,200 technologies to industries.

5. Access to DRDO Patents and Testing Facilities

Indian industries are being given free access to DRDO patents. DRDO testing facilities have also been opened to industries on a payment basis.

6. Defence Industrial Corridors

Defence Industrial Corridors, especially in Uttar Pradesh and Tamil Nadu, aim to build a strong defence manufacturing base by attracting investment and creating industrial clusters.

Significance of Defence Indigenisation

• Defence indigenisation is important for India’s security and development.
• It strengthens strategic autonomy by reducing dependence on foreign suppliers. It also improves India’s preparedness during wars and emergencies.
• Domestic defence manufacturing can create employment, promote research and development, support MSMEs and improve India’s technological base.
• It can also make India a defence exporter in the long run. A strong defence industrial base will support India’s ambition to become a major global power.

Challenges Ahead

• India’s defence indigenisation journey still faces many obstacles. The most important challenge is the lack of high-end technological capability in critical areas.
• Another concern is the slow pace of procurement reforms. If decision-making remains delayed, private firms may hesitate to invest heavily in defence production.
• India also needs better coordination between armed forces, DRDO, DPSUs, private industries, start-ups and academic institutions.
• The real test of Make in India in defence will be whether India can move from assembling equipment to designing and manufacturing advanced systems independently.

Way Forward

1. Reform Defence Procurement

• The procurement process should be simplified. Quantitative Requirements must be clear, realistic and flexible enough to allow innovation.

2. Create a Level Playing Field

• Private firms and DPSUs should compete on fair terms. The government should act as a strategic buyer rather than favouring one category of producer.

3. Strengthen Research and Development

India must invest more in defence research in areas such as:

• Directed energy weapons
• Hypersonic weapons
• Artificial intelligence
• Quantum technologies
• Space situational awareness
• Underwater domain awareness
• Advanced drones and counter-drone systems

4. Improve Talent Retention

• Top scientists and engineers in public defence institutions should receive better pay, research freedom and modern laboratory facilities.
• This will help India retain skilled human resources.

5. Promote Public-Private-Academia Collaboration

• Armed forces, DRDO, DPSUs, private companies, start-ups and universities must work together. This will create a strong innovation ecosystem.

6. Focus on Emerging Warfare Technologies

• India must not focus only on traditional platforms like tanks, aircraft and ships. It must also invest in low-cost and scalable technologies such as drones, sensors, cyber systems and AI-enabled decision-making tools.

7. Ensure Real Technology Transfer

• India should focus on gaining core technologies, not just assembly rights. Joint ventures should include design, development and intellectual property sharing.

Conclusion

Make in India in the defence sector is essential for India’s national security, strategic autonomy and technological strength. Operation Sindoor and recent global conflicts show that future wars will be shaped by speed, innovation, drones, sensors, artificial intelligence and precision systems.

India has made progress through FDI reforms, DRDO technology transfer, defence corridors and private sector participation. However, import dependence, procurement delays, limited high-end technology and unequal treatment of private firms remain major challenges.

India needs a balanced defence ecosystem where the public sector, private industry, start-ups and research institutions work together. A self-reliant defence sector will not only strengthen India’s security but also support economic growth and national power.