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Boosting firepower: India shifts towards private defence manufacturing

11 7
20.03.2025

Atmanirbharta (self-reliance) in defense is the flavor of the season in India. The country’s defense manufacturing sector is rapidly emerging as a cornerstone of New Delhi’s strategic and economic ambitions, and government policies are focusing on making sure that modern weaponry is both designed and manufactured in India, or, at the very least, is “Made-in-India.”

The Indian military has identified over 5,000 items that must be manufactured in the country rather than imported. Called the positive indigenization list (PIL), the initiative began in 2020 and aims to offer defense items to be indigenized by Indian manufacturers, including small and medium enterprises and startups. It has already yielded results, according to the Defense Ministry.

Defense production and exports are being monitored at the highest levels of the executive. Ambitious targets are being set: 75% of the defense capital budget has to be spent procuring India-made products. The private sector is being encouraged to enter defense production, which was hitherto public-dominated. Some big industrial groups have entered defense, but there are also large numbers of Micro, Small & Medium Enterprises (MSMEs) and start-ups that are producing international quality components and subsystems to global manufacturers.

It was different for the newly independent India. In the early 1950s, the country’s economy was greatly influenced by the Soviet “socialist” approach, and evolved its five-year plans. Perhaps that was the best for those times.

Throughout the 1950s, there was Soviet assistance and technology transfer in multiple industrial sectors such as steel, defense, railways, construction equipment, metal, mining, petrochemicals, and much more to India. A very important part was the building of military aircraft, aero-engines and avionics factories. At one point the Indian armed forces had nearly 85% of military equipment of Soviet or Russian origin.

Back then, India’s private sector was relatively small and primarily focused on meeting the daily needs of the masses. The government utilized public funding to establish essential infrastructure, nationalizing key industries such as banking, car manufacturing, and aircraft production. This approach may have been suitable for that time.

Over the long term, both public and private sectors exhibited distinct strengths and weaknesses. The public sector benefits from government funding but operates under the bureaucratic control of government departments. Decision-making can be complex, and progress monitoring is similarly cumbersome. With taxpayers’ money at stake, accountability tends........

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