Supportive state policies, indigenous innovation, and a booming global market are propelling Indian organisations to design and provide domestically manufactured defence equipment to the Indian armed forces, and the international market.
The Indian defence industry is undergoing a significant transformation, aiming for a brighter future. Shifting away from heavy reliance on inter-governmental purchases under non-competitive or bilateral agreements, India is now focusing on incremental steps towards achieving self-sufficiency in defence equipment. This marks a departure from its reputation as the “world’s largest defence importer.”
This transformation is largely attributed to robust innovations within the domestic defence manufacturing sector in recent times. These innovations hold the potential to evolve into a fully indigenous defence sector for the country.
India ranks among the world’s top spenders on defence, with a total budget of INR 5.25 lakh crore allocated for production. Its roster of arms suppliers has expanded beyond Russia to include Israel, France, the United States, and the United Kingdom. Concurrently, India’s defence exports have surged eightfold in the past 5-6 years. With an ambitious target to manufacture equipment worth US$ 25 billion by 2025, the Indian defence sector is not only meeting domestic demand but also serving global markets.
Amidst the global growth in the defence industry, there is considerable excitement about innovations poised to propel the sector to new heights. Hindustan Aeronautics Limited (HAL) is set to launch India’s first-ever Public Sector Undertaking (PSU) in Malaysia, a move expected to strengthen diplomatic ties and defence cooperation while laying the groundwork for a partnership grounded in solidarity and mutual respect.
A significant catalyst behind the growth of India’s defence sector is the favourable state policies that have spurred the development of world-class defence infrastructure. These governmental interventions have hastened the design, development, and manufacturing of defence equipment.
Government policies and initiatives have also been pivotal in amplifying efforts to achieve self-reliance in India’s defence industry.
The announcement of 18 major defence platforms for design and development procurement exemplifies this commitment.
As part of the Atma Nirbhar Bharat Abhiyan, 25% of the defence budget has been allocated to the aforementioned platforms for research, design, and development.
The Defence Acquisition Procedure (DAP), instrumental in facilitating procurement and acquisition procedures for upgraded technology, represents a significant leap toward India becoming a USD 5 trillion economy by 2024.
In alignment with championing the Make in India initiative, the defence sector serves as a cornerstone of the nation’s economic strength. Therefore, it is crucial to prioritise the establishment of strategic partnerships through schemes and policies aimed at reducing life cycle costs and fostering a robust ecosystem.
Foreign Direct Investment (FDI) has emerged as a significant contributor to the nation’s economic growth. The liberalisation of FDI stands among various efforts undertaken by the Government of India to foster development. In the defence sector, FDI has surged by 74% through the automatic route and 100% through the government route. There is optimism that these endeavours may attract FDI amounting to US$120-160 billion annually by 2025.
Additionally, India now boasts two indigenous defence industrial corridors located in Uttar Pradesh and Tamil Nadu. Notably, the country exported around Rs. 1,387 crores worth of defence-related tools and equipment in just the first quarter of the financial year 2022-23. Moreover, in the fiscal year 2021-22, there was a remarkable 54.1% increase in defence and technology-related exports.
These new initiatives and policies concerning innovation and research are propelling the Indian defence sector to unprecedented heights. The remarkable growth and evolution of the Indian defence sector signify a significant stride toward the nation’s journey of self-reliance.
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