Increase of Private Sector Share in India’s Defence Production 

Syllabus: GS3/ Defence

Context

• According to the Department of Defence Production, the private sector contributed ₹33,979 crore (22.56%) to India’s total defence production of ₹1,50,590 crore in FY 2024-25.
  • This marks the highest-ever private participation since 2016-17, when the share was 19%.

Defence Production in India

• Sectoral Contribution: In FY 2024-25, defence public sector undertakings (DPSUs) accounted for 57.50% of the total defence production, while Indian ordnance factories contributed 14.49%, and non-defence PSUs 5.4%.
• Defence Budget Growth: Increased from ₹2.53 lakh crore in 2013-14 to ₹6.81 lakh crore in 2025-26.
• In 2024-25, India achieved its highest-ever defence production of ₹1.50 lakh crore, more than three times the ₹46,429 crore recorded in 2014-15.
• Surge in Indigenous Defence Production: 65% of defence equipment is now manufactured domestically, a significant shift from the earlier 65-70% import dependency.
• India targets ₹3 lakh crore in defence production by 2029, reinforcing its position as a global defence manufacturing hub.

Growth in Defence Exports

• India’s defence exports have surged, from ₹686 crore in 2013-14 to ₹23,622 crore in 2024-25, a 34-fold increase.
• India’s diverse export portfolio includes bulletproof jackets, Chetak helicopters, fast interceptor boats, and lightweight torpedoes.
• India exports defence equipment to over 100 countries, with the U.S., France, and Armenia, emerging as the top three destinations in 2023-24.

Government Intervention

• Government schemes such as iDEX (Innovations for Defence Excellence) and DTIS (Defence Testing Infrastructure Scheme) enable innovation within the Defence & Aerospace ecosystem.
• Acing Development of Innovative Technologies with iDEX (ADITI) Scheme is a sub-scheme within iDEX with an outlay of Rs 750 crore covering the period of 3 years from 2023–2024 to 2025–2026.
  • It aims to support critical and strategic technologies such as satellite communication, advanced cyber technology, artificial intelligence, quantum technology, nuclear technologies, and underwater surveillance. 
• Two Defence Industrial Corridors (DICs) have been set up in Uttar Pradesh and Tamil Nadu to boost defence manufacturing. These corridors provide incentives to companies investing in the sector.
• Self-Reliant Initiatives through Joint Action (SRIJAN): Launched by the Department of Defence Production (DDP) in 2020 to promote indigenisation under Atmanirbhar Bharat.
  • Serves as a common platform for Defence Public Sector Undertakings (DPSUs) and the Armed Forces (SHQs) to list imported items for domestic manufacturing.
• Ease of Doing Business (EoDB):
  • In 2019, the Defence Product List was streamlined to reduce the number of items requiring a manufacturing licence.
  • The validity of defence licences under the Industries (Development and Regulation) Act, 1951, has been extended from three years to 15 years, with a further extension option of up to 18 years.

Way Ahead

• Provide Level Playing Field: Ensure transparent procurement processes so that private firms compete fairly with DPSUs.
• Strengthen Export Ecosystem: Diversify export destinations and incentivise private companies to enter newer global markets.
• Encourage Start-ups: Expand support under iDEX and ADITI to nurture defence start-ups in AI, quantum, space, and cyber domains.
• Promote Joint Ventures: Facilitate partnerships with foreign defence majors for co-development and technology transfer.
• Skill Development: Launch specialised training programmes to create a skilled workforce for emerging defence technologies.

Source: TH