Transforming India’s Defence Sector

Syllabus: GS3/ Defence

Context

• India’s defence sector is undergoing significant transformation, driven by modernization efforts, self-reliance initiatives, and strategic global partnerships. These developments aim to enhance military capabilities and position India as a major player in the global defence market.

India’s Defence Sector: Current Overview

Growth in Defence Production:

• Union Budget FY 2024-25: ₹6.22 lakh crore (approx. $75 billion) allocated to the Ministry of Defence.

• Indigenous Production: Achieved record growth in FY 2023-24 with ₹1,26,887 crore, a 16.7% increase from the previous year.

Growing Defence Exports:

• Defence exports rose 14 times between FY17 and FY24, reaching $2.6 billion.
• Future Targets: $5 billion by 2025 and $7 billion by FY30.
• Key markets: Southeast Asia, Africa, and the Middle East.

Budget Allocation:

• Capital outlay of ₹1.62 lakh crore in FY 2023-24 for indigenous procurement, reducing dependency on foreign suppliers.

Key Reforms in the Defence Sector

• Liberalized FDI Policy:
  • FDI Limit: Increased to 74% (Automatic Route) and up to 100% (Government Route) for companies introducing modern technology.
• Domestic Procurement Prioritized:
  • Initiatives like Make in India and Defence Acquisition Procedure (DAP) 2020 promote self-reliance.
  • 2025 is declared as the ‘Year of Reforms’ for defence.
• Simplified Licensing:
  • Extended validity periods for industrial licensing.
• iDEX Scheme:
  • Encourages startups and MSMEs to participate in defence innovation.
• Indigenization Portal (SRIJAN):
  • Facilitates collaboration between Indian industries and MSMEs for defence production.
• Defence Industrial Corridors:
  • Established in Uttar Pradesh and Tamil Nadu to boost manufacturing.
• Private Sector Participation:
  • Companies like Larsen & Toubro, Tata Advanced Systems, and Mahindra Defence Systems are strengthening the defence ecosystem.

Modernization of Armed Forces

• Army: Induction of Pinaka rocket launchers, Arjun Mark 1A tanks, and advanced rifles.
• Air Force: Adoption of Tejas LCA and procurement of Rafale jets.
  • Development of the Advanced Medium Combat Aircraft (AMCA) for fifth-generation capabilities.
• Navy: Focus on indigenous platforms like INS Vikrant, INS Arighaat, and INS Tushil. Expansion under Project 75 and 75(I) for advanced submarines.
• Missile Systems: Development of BrahMos supersonic cruise missile and Akash SAM systems.
• Emerging Technologies: Integration of AI, cybersecurity, space-based assets, and quantum computing.
  • DRDO’s focus is on unmanned systems, swarm drones, and hypersonic technology.

Opportunities in Defence Manufacturing

• Indigenization: 75% of the defence capital procurement budget in FY24 is allocated for indigenous sources.
• Modernization: Planned expenditure of $130 billion on fleet modernization in the next 5–7 years.
• Cost Savings: Lower manufacturing costs in India compared to Europe/North America.
• Strong Supply Chain: Over 350 major manufacturers and 10,000 MSMEs collaborate in the sector.

Key Challenges

• Dependence on State-Owned Enterprises:
  • Public sector undertakings dominate defence production (~85% of output), limiting private sector efficiency.
• Indigenous Technology Development:
  • Projects like the Kaveri engine highlight challenges in achieving advanced military technology.
• Slow Modernization:
  • Delays in technological upgrades and procurement processes.
• Export Controls:
  • Geopolitical complexities, such as Indian ammunition in unintended conflict zones (e.g., Ukraine), require careful navigation.
• Strategic Balancing:
  • Partnerships with the USA, France, and Russia must be balanced with maintaining strategic autonomy.
• Bureaucratic Hurdles:
  • Persistent delays in approvals and lack of inter-agency coordination.

Future Vision

• Global Ambitions:
  • Establishing the Bharatiya Antariksh Station (BAS) by 2035 and achieving an Indian Crewed Lunar Landing by 2040.
• Advanced Launch Vehicles:
  • Development of next-generation systems for the future battlefield.
• Enhanced Manufacturing:
  • Expanding capabilities of industrial corridors and private sector participation.

Conclusion

• India’s defence sector is on a transformative path, marked by its pursuit of self-reliance, modernization, and global collaboration. While challenges such as technological hurdles and bureaucratic inefficiencies persist, India’s trajectory towards becoming a global defence manufacturing hub is clear. Continued reforms, enhanced private sector involvement, and strategic partnerships will strengthen India’s national security and solidify its role in the global defence landscape.