HOW HAVE ‘ATMANIRBHAR BHARAT’ AND ‘MAKE IN INDIA’

INITIATIVES BROUGHT ABOUT A SIGNIFICANT CHANGE TO

BOOST INDIA’S INDIGENOUS DEFENCE PRODUCTION?

CHAPTER I

INTRODUCTION & METHODOLOGY

“You don’t have to worry about burning bridges if you’re building your own.”
- Kerry E. Wagner

“Self-reliance is the best defence against the pressures of the moment.”

- Carl von Clausewitz

Introduction

1. As India marches toward its destiny, Atmanirbhar Bharat and Make in India
converge—a symphony of ambition, resilience, and determination. The defence
industry, once reliant on external sources, now stands on the cusp of transformation.
It is not merely about building tanks and missiles; it is about building a nation’s pride,
self-reliance, and security. In his address to the nation on May 12, 20201, the Prime
Minister expressed India’s resolve to turn the COVID-19 pandemic crisis into an
opportunity to strive for self-reliance. For this, the Government introduced the Self-
reliant India Programme (Atmanirbhar Bharat Abhiyan) to be built around five pillars.
“India’s self-reliance will be based on five pillars — economy, infrastructure, technology
driven system, vibrant demography and demand. When India speaks of self-reliance,

1SELF-RELIANT INDIA PROGRAMME, https://indbiz.gov.in/invest/self-reliant-india-programme-aatm-

nirbhar-bharat/
 2

it does not advocate for a self-centred system. In India’s self-reliance there is a

concern for the whole world’s happiness, cooperation and peace,” PM Modi said2.

Self-Reliance in Def Sector

2. Government has taken several policy initiatives in the past few years and
brought in reforms to encourage indigenous design, development and manufacture of
Defence equipment by Indian Industry including Micro, Small and Medium Enterprises
(MSME) and Start-ups, thereby promoting self-reliance in defence manufacturing &
technology in the country3.

3. India ranks fourth among 12 Indo-Pacific nations in self-reliant arms production

capabilities, according to a study released this month by the Stockholm International
Peace Research Institute (SIPRI), a widely respected independent resource on global
security4. The study, which measures self-reliance until 2020, is based on three
indicators of self-reliance in each country:-

(a) Arms procurement — imports, licensed and domestic production as a

proportion of the government’s total procurement of major conventional arms;

(b) Arms industry — the study presents the five largest arms companies in
each country, where data are available, ranked by sales of arms and military
services in 2020 to both domestic and export customers;

(c) Uncrewed maritime vehicles, the sea equivalent of drones — covering

both uncrewed surface vehicles (USVs) and uncrewed underwater vehicles
(UUVs), meant to provide a qualitative understanding of how countries are
engaging domestic research institutes and firms to produce such cutting-edge
systems.

2 What is ‘Atmanirbhar Bharat Abhiyan’ announced by PM Modi,

https://indianexpress.com/article/india/atmanirbhar-bharat-abhiyan-pm-modi-economic-package-
6406850/
3 https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1947700
4 Aatmanirbhar in defence production: Where India stands among Indo-Pacific nations,

https://indianexpress.com/article/explained/india-defence-production-exports-imports-capabilities-
explained-8196801/
 3

4. India is ranked as the second largest importer of arms for its armed forces in
2016-20. India is highly dependent on imports of complete foreign major equipment
and arms, including many produced under licence or as components for its domestic
production. Of India’s total volume of procurement in 2016–20, 84 per cent was of
foreign origin5. Domestic arms companies provide only 16 per cent of its total
procurement. According to the study, the significant arms sales of local firms and the
high level of licensed production push India to fourth position in the list.

5. Hindustan Aeronautics Ltd, Indian Ordnance Factories, Bharat Electronics,

Mazagaon Docks and Cochin Shipyard are among the major Indian arms servicing
companies. Ashok Leyland, one of the largest suppliers of trucks to the Indian Army,
is the only company ranked in the top-50 in the Indo-Pacific.

6. India, a nation with a long history of diverse strategic interests, stands at a

critical juncture. As it navigates a rapidly changing geopolitical environment, the
question of whether its industry is sufficiently self-reliant and resilient to support the
successful prosecution of war has gained salience. India's security concerns span
from its contested borders with Pakistan and China to the maritime domain in the
Indian Ocean, and it is increasingly drawn into the gravitational pull of global affairs.
As such, the capability of India’s industry to adapt to new challenges, ensure continuity
in times of conflict, and contribute to its broader security and strategic goals is a matter
of paramount importance.

Review of Literature

7. A large number of books, research papers and articles are available on the
subject highlighting the importance of indigenisation of defence industry of India.
Several books, reports, research papers and articles on Atmanirbhar Bharat and
indigenous defence production have been reviewed for the dissertation. Details of
some of these are given in subsequent paragraphs:-

5 Ibid.
 4

(a) Indian Defence Industry by Laxman Kumar Behera. The book

thoroughly probes the Indian defence industry and policies pertaining to it. It
identifies the key shortcomings and provides a detailed roadmap to succeed in
the defence production sector.

(b) Defence Production and Mission ‘Make in India’ by Major General

Mrinal Suman. Identifies the reasons for the dismal state of the Indian
defence industry suggests corrective measures. It recommends integration of
private sector and supports to MSMEs.

(c) Aatmanirbharta: Revisiting the Idea and Practices by Vandana

Mishra and Swadesh Singh. A collection of essays thoughtfully exploring
the concept of self-reliance with a comprehension view of the idea of
Aatmanirbharta. The book emphasizes self-awareness, inner strength, and
societal introspection.

(d) ‘Atm Nirbhar Bharat’ in Defence by Dr Ajay Chouhan. The book

critically evaluates the ‘Atmanirbhar Bharat Abhiyan’ with specific focus on
defence sector to include defence technology, industry and production.

(e) Centre for Land Warfare Studies (CLAWS) (Issue Brief No 339).
Discusses about the ‘twin initiatives’ of the Government – ‘Make in India’ and
‘Atmanirbhar Bharat’, which have come to occupy a position wherein they are
seen as ‘prime-movers’ that set the pace of the country’s forward journey on
the road to self-reliance - be it defence or civil sector.

(f) Make in India - Challenges and Opportunities by P. Saranya

Boopathi. This study explains the concept of Make in India campaign, its
importance, schemes and its impact on Indian economy. This paper also
identifies the challenges and opportunities involved in this scheme.
 5

Statement of the Problem

8. India currently imports most of its defence related products as well as

components. Private sector participation in defence has been limited till recent times
thereby hindering foreign producers to form strategic partnerships with various Indian
businesses. This strategic collaboration is required to enhance the producers’
exposure to the unexplored defence sector of India and generate numerous
opportunities for the Indian defence sector industries by strengthening production and
upgrading equipment. Accommodative government rules will help in achieving self-
reliance, besides promoting indigenisation and technology modernisation.

9. The research shall study various defence related aspects of ‘Atmanirbhar

Bharat’ and ‘Make in India’ initiatives to include how these initiatives have brought
about a significant change in India’s indigenous defence production, thereby reducing
imports, promoting manufacturing of defence equipment within the country and also
export military equipment to other countries around the world.

Objectives of Research

10. To understand how ‘Atmanirbhar Bharat’ and ‘Make in India’ initiatives have
significantly boosted India’s indigenous defence production, specific objectives of this
study are as mentioned below :-

(a) To understand India’s historical dependence on import of defence

equipment and its drawbacks.

(b) To understand ‘Atmanirbhar Bharat’ and ‘Make in India’ initiatives in

detail, their key features and government’s policies and initiatives under these
programmes.

(c) To analyse how these initiatives have made an impact on indigenous

defence production.
 6

(d) To analyse certain milestones already achieved and perceived

challenges of these initiatives.

(e) To analyse the future of India’s indigenous defence production and

potential of export of defence products.

(f) To understand the long-term vision for achieving self-reliance in defence

and explore emerging technologies and strategic partnerships that can further
bolster India’s defence capabilities.

Hypothesis

11. The hypothesis is ‘‘Atmanirbhar Bharat’ and ‘Make in India’ initiatives have
significantly boosted India’s indigenous defence production’.

Research Methodology and Data Collection

12. The research will be a combination of analytical exploration of literature and

study of various indigenous defence industries – both government as well as private
as per relevant material from open domain, various books and magazines published
on the subject and also through literature and articles available online. It will also
comprise study of various government policy changes that have attracted foreign
companies to start manufacturing in India.

Methods of Data Analysis.

13. This research will adopt a combination of both qualitative and quantitative data
analysis. Statistical information concerning the subject will be analysed in quantitative
data analysis. The information gathered from various sources will be analysed as part
of qualitative analysis during the period of the research.
 7

Chapterisation

14. The dissertation is planned to be organised in five chapters. Issues for

discussion and analysis in each chapter are briefly summarised below:-

(a) Chapter I: Introduction and Methodology. This chapter will explain

the necessity of undertaking the study to include the broad topic, statement of
problem, working out of hypothesis, literature review, research methodology
and the organisation of the dissertation.

(b) Chapter II: Background. This chapter will discuss about India’s
defence requirements after independence, key military equipment suppliers to
India, certain limiting factors and problem areas and current state of India’s
government defence public sector units. It will also include the manufacturing
capability of existing government as well as private defence industries.

(c) Chapter III: ‘Atmanirbhar Bharat’ and ‘Make in India’. This chapter
will discuss about ‘Atmanirbhar Bharat’ and ‘Make in India’ initiatives in detail,
their key features and government’s policies and initiatives under these
programmes. It will also focus on government’s approach to defence equipment
related issues and steps already taken. It will analyse the impact on import &
export of defence equipment and the research & development on such
equipment and technologys post implementation of these initiatives.

(d) Chapter IV: The Big Impact. This chapter will analyse how these
initiatives mentioned at paragraph 14 (c) above have made an impact on
indigenous defence production, certain milestones already achieved and
perceived challenges of these initiatives. Also, investments made by foreign
defence industries in India, the future of India’s indigenous defence production
and its potential of exporting these defence products will also be highlighted in
this chapter.

(e) Chapter V: Way Ahead. This chapter would highlight the potential of
India to achieve self-reliance in defence production and few recommendations
 8

to achieve this feat in the coming future. It will also explore the impact of
indigenisation on new generation equipment on war fighting capability of the
country.
 9

CHAPTER II

BACKGROUND

“We were anxious to use all the resources we had for economic betterment, for
industrialization and all that. We were anxious not to spend that much on the Army.
No country that is not industrialized is militarily strong today”
- Jawaharlal Nehru6,
Prime Minister, 1963

India's Defence Industry : A Historical Overview

15. the pre-independence defence industrial infrastructure in India was limited. It

generally catered to the lowest spectrum of defence production – repair and overhaul
of imported weapons system7. The then ruling British followed a policy of retaining
strategic capabilities for themselves while allowing the native Indians to assist in the
tactical dimensions, confined to minor works in most endeavours. Indian defence
industry at the time of independence consisted of small-scale factories and mills in
and around military fortifications, which catered to the requirements of the British
Indian Army8.

16. Early Days of India's Defence Production. India's defence production

capabilities can be traced back to the pre-independence era. In 1801, the Ordnance
Factories Board (OFB) was established to produce military equipment for the British
East India Company. The OFB played a crucial role in supplying the British Army
during the Indian Rebellion of 1857 and World War I. Apart from this, other factories

6 Jawaharlal Nehru‘s Speeches 1963-1964, Publications Division, Ministry of Information and

Broadcasting, Government of India, p.188.
7 Chouhan Ajay, ‘Atm Nirbhar Bharat’ in defence (Surendra Publications, 2021), p.29-36.
8 Dhirendra Singh, "Committee of Experts for Amendments to DPP-2013 Including Formulation of

Policy Framework", Report of the Experts Committee, Ministry of Defence, Government of India, July
2015.
 10

like Mazagaon Docks (Mumbai), Garden Reach Shipyards (Calcutta), an ammunition

factory at Kirkee (1889), a rifle factory at Ishapore (1901), gun carriage factory at
Jabalpur (1904), and others were built primarily to produce for the British forces9.

17. The British set up 18 such ordnance factories that were used in support of
colonial rule in India and to aid their war effort in Asia during World War 2. These have
been majorly refurbished and 21 additional Ordnance Factories established in India
since 194710. In brief, pre-partition Indian defence-industry capacities were confined
only to a supplementary role and were placed at the lowest end of the production
spectrum.

18. Post - Independence Era. At independence, India’s defence industrial

production came primarily from the existing 16 Ordnance Factories. These were
engaged in the production of low technology items like small arms and ammunition,
mines and other explosives. Their cumulative value of production was estimated at
roughly US $7-8 million11. In the 1950s and 1960s, India established several new
defence public sector undertakings (DPSUs), such as Hindustan Aeronautics Limited
(HAL) and Bharat Electronics Limited (BEL). These DPSUs played a key role in
producing critical defence equipment, such as fighter aircraft, tanks, and missiles. As
demands for R & D grew, the Defence Research and Development organisation
(DRDO) was created in 1958, which to-date remains the most important contributor to
India’s defence R & D activities.

19. Both, DPSUs and Ordnance Factories, are administered by the Department of
defence Production under the Ministry of Defence. Both have their own research and
development units although the overall R & D activities are met by DRDO.

20. In 1962 India found herself woefully short of the most basic defence
requirements such as soldiers’ clothing and winter protection equipment at high
altitude where they were to fight the Chinese invasion. In 1965 as also in 1971 India
had to manage with some World War II vintage fighter aircraft (GNATs, Hunters,

9 Ibid.
10 Raghunandan D, Post-Independence India Made Major Strides in Defence Manufacturing, 10 Jul
2020, https://www.newsclick.in/Post-Independence-India-Defence-Manufacturing-Achievements-
Downplayed-by-Modi
11 Ibid, p.31.
 11

Mystere, Vampires, Canberra etc.) and Sherman, Centurion, AMX 13 battle tanks
against some of the most modern weapon systems the adversary had (Sabre F86,
Star Fighter F 104 and Patton Tanks)12. On the financial side, the import of weapon
systems continued to increase since as early as 1967. In the period 2013 to 2017 India
was the top importer of military hardware. India accounted for 9.5 to 12 percent of total
global imports of military systems between this period.

21. In terms of organizational efficiency of defence production infrastructure, it was

characterized by inefficiencies, delays, neglect, lack of direction and decision
paralysis. As per Laxman Behera of IDSA, the productivity of Indian defence
production infrastructure in 2016 was about 4.5 times lower than their leading
international counterparts. The Light Combat Aircraft (LCA) project that was
announced in 1983 did not have a project officer (who was to be provided by the IAF)
till as late as 1999.

22. The sector saw significant growth in the latter part of the 20th century, and rapid
progress in the last 20 years. In the 1980s, India began a renewed effort to galvanise
its domestic defence industry by investing largely in DRDO and the development of
indigenous missile systems such as ‘Prithvi’, ‘Akash’ and ‘Nag’. India also began the
development of its flagship aeronautical project, the Light Combat Aircraft during this
period. In 1998, India entered into an agreement with the Soviet Union to develop a
supersonic cruise missile system, the ‘Brahmos’, through a joint venture13.

23. Involvement of the Private Sector. India has recently allowed the private
sector to enter the defence production. India’s defence exports were INR 4,682 crore
(US $0.66 billion) in 2017–2018 and INR10,500 crore (US $1.47 billion) in 2018–2019
and are expected to increase exponentially in next few years due to aggressive
measures taken up by the govt since 2014. Since 2016-17, the earliest for which such
data is available, there has been a gradual shift away from the public sector to the
private sector. The share of the private sector in total defence production has risen

12 Indigenization of Defence Production: India’s Journey from Vision to Outcomes, Brig (Dr) Ashok
Pathak (Retd.), September 19, 2022,
https://www.vifindia.org/article/2022/september/19/indigenization-of-defence-production
13 Evolution of Indian Defence and Security Industry in These Recent Years by Col Manoj Mehrotra

Vipul Mehrotra - 13 April, 2020

https://diplomatist.com/2020/04/13/evolution-of-indian-defence-and-security-industry-in-these-recent-
years/
 12

from 19% in 2016-17 to 22% in 2018-19. In the same period, the share of the public
sector (DPSU plus ordnance board) has decreased from 75% to 72%14.

24. In 2004, a committee was set up by the government under the chairmanship of
Shri Vijay Kelkar to examine and recommend changes needed in defence acquisition
procedures. The report, released in 2005, encouraged the involvement of the country’s
best private firms. In 2007, the Tata Group entered the defence manufacturing space
with Tata Advanced Systems Limited. Other prominent groups with a presence include
the Mahindra group, Hinduja group, Kalyani group, L&T, both Ambani brother groups
and, most recently, the Adani group.

25. Mahindra firms and Hinduja group-owned Ashok Leyland are supplying
armoured vehicles to the Indian army. Kalyani Strategic Systems and Bharat Forge of
the Pune-based Kalyani group are producing a range of defence equipment, including
artillery systems, ammunition, missiles and air defence solutions and small arms. But
their numbers, at present, are not much to speak of. In 2018-19, the size of the entire
private sector in the defence space was ₹17,350 crore—about one-third the quarterly
turnover of Reliance Industries Ltd. Data in the public domain shows that Tata
Advanced Systems had ₹341 crore revenues in 2017-18 and Kalyani Strategic
Systems ₹119 crore revenues in 2019-2015.

Salient Aspects of Indian Defence Sector

26. The Indian defence sector is characterised by a dynamic interplay of

government control, limited private sector involvement, and the influential role of the
armed forces. Examining key aspects reveals the nation's potential for self-reliance
and growth in defence manufacturing. It can be understood from the following aspects,
which are listed below: -

14 Private defence business gets one more nudge, Arjun Srinivas, 01 Oct 2020,
https://www.livemint.com/news/india/private-defence-business-gets-one-more-nudge-
11601460654397.html
15 ibid.
 13

(a) India’s military spending of US $81.4 billion was the fourth highest in the
world. It was 6% more than in 2021 and up by 47% from 2013. According to a
study released by the Stockholm International Peace Research Institute
(SIPRI), India ranks 4th among 12 Indo-Pacific nations in self-reliant arms
production capabilities. But the concern is, India is also ranked as the 2nd
largest importer of arms for its armed forces in 2016-2016.

(b) Despite leading amongst the group of arms-importing nations, India’s

defence imports declined by 11% between 2013-17 and 2018–2217 due to
“complex procurement process, efforts to diversify arms suppliers and attempts
to replace imports with local designs”, the SIPRI finding on global military
spending stated.

(c) The expenditure on defence procurement from foreign sources has

reduced from 46% of overall expenditure in 2018-19 to 36.7% in December,
2022. Moreover, the Indian defence export has risen by more than eight times
since 2016-17. In 2016-17, the defence exports were worth Rs 1,522 crore
which has gone up to Rs 13,800 crore till date18.

(d) India predominantly engages in the licensed production or

manufacturing of defence equipment, relying on the Transfer of Technologies
(TOT) acquired through the past procurement of main equipment/systems from
the Original Equipment Manufacturers (OEMs).

(e) India's defence sector has been largely reliant on imports, with minimal
involvement of the private sector.

16 Atma Nirbhar in Defence Production, 11 Oct 2022

https://www.drishtiias.com/daily-updates/daily-news-editorials/atma-nirbhar-defence-production
17 “Military Spending. India’s Arms Import Declines 11% but Remains Top Importer among Nations:

SIPRI,” March 13, 2023.

18 Ministry of Defence, “Self-Reliance in Defence Manufacturing,” April 3, 2023.
 14

Key Mil Eqpt Suppliers to India

27. When India became independent, the country was totally reliant on Britain for
its armaments for the three services. There was some leftover equipment of the US
armed forces from the World War II period – Dakota aircraft, some Sherman tanks and
transport vehicles. Most of the armaments of the 1950s were purchased from Britain,
including naval vessels, Centurion tanks, Canberra, Hunter, Sea Hawk and Gnat
aircraft. AMX-13 light tanks, Alize aircraft, and Alouette helicopters were acquired from
France19.

28. The period of 1963-1971 also witnessed a steady development in the relations
between India and the Soviet Union. This relationship helped India gain massively in
the field of technology and its transfer, apart from the stronger footing in global politics,
even though they followed the policy of non-alignment. The Soviets accepted this and
chose to help bolster the Indian Economy by helping build industries at low cost with
minimum Soviet personnel being stationed in India during the process 20. In 1964, the
USA refused to sell their F-104 Fighter Jets to India for political reasons which once
again opened the doors for a big arms deal between India and the USSR.

29. During the leadership of late Prime Minister Rajiv Gandhi, India engaged in
arms trade with France, the USSR, Germany and Sweden, purchasing various
equipment including the FH77B Bofors guns.

30. India’s choice of arms trade partners has changed significantly over time as the
country strives to reduce dependence on old partners such as Russia. The US, Israel,
France, and UK were the highest arms exporters to India in the last 20 years. Smaller
countries such as Uzbekistan and South Korea have also been part of India’s arms
procurement journey. Uzbekistan was one of the largest arms exporters to India for

19 Subrahmanyam K., Arms and Politics, Jan 2005,

https://www.idsa.in/strategicanalysis/ArmsandPolitics_ksubrahmanyam_0305
20 Magan Tapakshi, Analysis of the Indian Defence Approach in the last 70 years Manekshaw Paper

No. 79, 2018

https://archive.claws.in/images/publication_pdf/67537579_AnalysisoftheIndianDefenceApproachinthel
ast70years_CLAWS.pdf
 15

three years in a row since 2009, while South Korea has significantly increased its share
of arms exports in India in the last three years21.

31. India’s ongoing military modernisation shows that many of the immediate
operational requirements for advanced equipment are being exclusively fulfilled
through imports. In the last decade, India imported defence equipment totalling US
$33.8 billion. The top five suppliers are Russia, the U.S., Israel, France, and the UK,25
in that order22.

State Owned Defence Industrial Base

32. India’s efforts to set up a defence-industrial base began quite early, immediately
after Independence in 1947. Under the Industrial Policy Resolution of 1956,
manufacturing of “Arms and ammunition and allied items of defence equipment” was
made an exclusive responsibility of the state – primarily because of the capital-
intensive nature of the sector. This policy gave rise to a state-owned defence-industrial
base comprising nine defence public sector units (DPSUs), along with the 41 factories
of the Ordnance Factory Board (OFB), which manufactured basic military equipment
and carried out licensed production of imported platforms.

Figure 2.1: India’s State-Owned Defence-Industrial Base

21 Sharma, Samrat, How India changed preference for arms suppliers in 50 years, 18 Mar, 2021
https://www.indiatoday.in/diu/story/how-india-changed-preference-for-arms-suppliers-in-50-years-
1780458-2021-03-17
22 Trend Indicator Value of arms exports to India, 2008-2018 – data generated from SIPRI Arms

Transfers Database, http://armstrade.sipri.org/armstrade/page/values.php

 16

33. This base achieved a monopoly in a monopsony market under state patronage
and guaranteed orders. But this monopoly didn’t benefit the military as missed
deadlines and spiralling costs became the hallmark of state-owned enterprises. The
unwillingness of Soviet defence companies (which became India’s main defence
supplier after the India-Pakistan War of 1971) to transfer design and technology and
the DPSUs’ lack of long-term focus on R&D-oriented planning resulted in a failure to
absorb the relevant technology. As a result, they faced challenges in designing and
developing indigenous platforms. Flagship projects, such as the Tejas fighter jet and
Arjun Main Battle Tank, which were to replace the imported equipment, took more than
three decades to develop and are still not best-in-class23.

34. Defence Public Sector Undertakings (DPSUs). India has Nine DPSUs
under the administrative control of the Ministry of Defence (Department of Defence
Production). These DPSUs have enabled India to produce the entire spectrum of
equipment comprising aircrafts, warships, submarines, missiles, high technology
electronic items, radar & communication equipment, earth movers, super alloys etc.
The details of these DPSUs are as under: -

(a) Bharat Dynamic Limited, Hyderabad (BDL).

(b) Bharat Electronic Ltd (BEL).

(c) Bharat Earth Movers Ltd, Bangalore (BEML).

(d) Garden Reach Shipbuilders and Engineers Ltd, Kolkata (GRSE).

(e) Goa Shipyard Ltd, Goa (GSL).

(f) Hindustan Aeronautics Ltd, Bangalore (HAL).

23 Patil Sameer, A Defence Industrial Agenda for India, Paper No. 24, July 2020, p.10,
https://www.gatewayhouse.in/wp-content/uploads/2020/08/Defence-Industrial-Agenda_Sameer-
Patil_2020_Final.pdf
 17

(g) Hindustan Shipyard Limited (HSL)

(h) Mazagon Dock Ltd, Bombay (MDL).

(j) Mishra Dhatu Nigam Ltd, Hyderabad (MDNL).

35. Defence Research & Development Organisation (DRDO). Since its

creation in 1958, the DRDO has been at the forefront of indigenous design and
development of defence equipment. The organisation, which has 24,700 employees,
including 7,300 scientists, and a budget of Rs 19,327 crore (or four per cent of the
MoD’s budget for 2020-21), is known for many remarkable achievements in strategic
programmes, a glimpse of which was the recent successful conduct of Mission Shakti,
an anti-satellite (ASAT) missile test.

36. However, in regard to conventional arms, there has been a deep-rooted

perception that the DRDO has not been so successful, even though the organisation,
with all its human resource and budgetary constraints, has designed and developed a
range of complex systems including Light Combat Aircraft (LCA), Main Battle Tank
Arjun, Pinaka multi-barrel rocket system, advanced towed artillery gun, and myriad
other weapons and sensors. In terms of value, the DRDO-designed products (other
than strategic systems), whether inducted or in the process of induction, amount to Rs
2,65,007 crore, as of 201724.

24 https://164.100.47.193/lsscommittee/Defence/16_Defence_43.pdf
 18

CHAPTER III

‘ATMANIRBHAR BHARAT’ AND ‘MAKE IN INDIA’

“Indian companies are looking for opportunities in the defence sector, and now the
private sector and the government are working together to achieve the national
security mission.”
- Narendra Modi25
Prime Minister

Introduction

37. In recent years, India has embarked on a transformative journey towards self-
reliance and indigenous manufacturing across various sectors, with particular
emphasis on defence production. The 'Atmanirbhar Bharat' (Self-Reliant India) and
'Make in India' initiatives have emerged as cornerstone policies of the government,
aimed at fostering economic growth, innovation, and strategic autonomy. These
initiatives have catalysed significant changes in India's defence ecosystem, reshaping
the country's approach to defence procurement, technology development, and
industry collaboration.

38. The 'Atmanirbhar Bharat' initiative, launched in May 2020, reflects the
government's vision to build a resilient and self-sufficient India. It encompasses a wide
range of sectors, including defence, with a focus on reducing dependency on imports
and promoting domestic manufacturing capabilities. Concurrently, the 'Make in India'
initiative, launched in 2014, seeks to transform India into a global manufacturing hub
by attracting investments, fostering innovation, and streamlining regulatory processes.

25 Rahul Singh, “Modi: India on track for a self-reliant defence sector”, Oct 16, 2021,
https://www.hindustantimes.com/india-news/modi-india-on-track-for-a-self-reliant-defence-sector-
101634323139543.html
 19

Together, these initiatives provide a holistic framework for revitalizing India's defence
industry and enhancing its capabilities to meet evolving security challenges.

39. Against this backdrop, this chapter explores the significant impact of these
initiatives on bolstering India's indigenous defence production capabilities. It examines
the key features of the schemes, government policies, approaches to defence
equipment-related issues, import-export statistics, ongoing research projects, and the
steps taken to promote domestic defence manufacturing.

‘Make in India Initiative - 2014’

40. Mission ‘Make in India’ was formally launched on 25 September 2014. It aims
at persuading indigenous and foreign companies to invest in manufacturing in India
by making it an irresistible destination, both for capital and technological investments.
To start with, 25 sectors of economy have been identified and defence manufacturing
is one of them. With a view to align and delineate DPP towards the achievement of
the objectives of ‘Make in India’, an expert committee under Dhirendra Singh was
constituted by MoD in May 201526.

41. The committee was of the view that the objectives of ‘Make in India’ could never
be achieved without integrating the private sector. For that, two types of well-defined
partnership models — depending upon the strategic needs, quality criticality and cost
competitiveness — were advocated. In the case of platforms of strategic importance,
‘Strategic Partnership’ model was suggested to create capacity in the private sector
on a long-term basis; over and above the capacity and infrastructure that exists in the
public sector. Consequent to the receipt of the recommendations of the expert
committee, DPP-2016 was promulgated with effect from 01 April 2016.

42. ‘Make in India’ programme is being used by the Government for defence
procurements by categorising the capital acquisition proposals under ‘Buy (Indian-
IDDM)’, ‘Buy (Indian)’, ‘Buy and Make (Indian)’, ‘Make’ and ‘Strategic Partnership

26 ‘Make in India’ and the Defence Sector: Progress and Challenges, July 10, 2019,
https://indiafoundation.in/articles-and-commentaries/make-in-india-and-the-defence-sector-progress-
and-challenges/
 20

Model’ categories of Defence Procurement Procedure (DPP)-2016. In the last four

financial years i.e. from 2015-16 to 2018-19, out of the total 210 contracts, 135
contracts have been signed with Indian Vendors including Defence Public Sector
Undertakings/ Public Sector Undertakings/ Ordnance Factory Board and private
vendors for capital procurement of defence equipment for Armed Forces such as
Helicopters, Naval vessels, Radars, Ballistic Helmets, Artillery Guns, Simulators,
Missiles, Bullet Proof Jackets, Electronic Fuzes, and Ammunition27.

43. In pursuance of ‘Make in India’ initiative of the Government, following measures

have been taken to achieve substantive self-reliance in defence production: -

(a) Defence Procurement Procedure (DPP) has been revised in 2016

wherein specific provisions have been introduced for stimulating growth of the
domestic defence industry.

(b) A new category of procurement ‘Buy {Indian-IDDM (Indigenously

Designed, Developed and Manufactured)}’ has been introduced in DPP-2016
to promote indigenous design and development of defence equipment. It has
been accorded top most priority for procurement of capital equipment. Besides
this, preference has been accorded to ‘Buy (Indian)’, ‘Buy and Make (Indian)’ &
‘Make’ categories of capital acquisition over ‘Buy (Global)’ & ‘Buy & Make
(Global)’ categories.

(c) Government has notified the ‘Strategic Partnership (SP)’ Model which
envisages establishment of long-term strategic partnerships with Indian entities
through a transparent and competitive process, wherein they would tie up with
global Original Equipment Manufacturers (OEMs) to seek technology transfers
to set up domestic manufacturing infrastructure and supply chains.

(d) The ‘Make’ Procedure has been simplified with provisions for funding of
90% of development cost by the Government to Indian industry and reserving

27 ‘Make in India’ Initiative in Defence Sector, 24 Jun 2019,

https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=1575384
 21

projects not exceeding development cost of Rs.10 Crore (Government funded)

and Rs.3 Crore (Industry funded) for MSMEs.

(e) Separate procedure for ‘Make-II’ sub-category has been notified wherein
a number of industry friendly provisions such as relaxation of eligibility criterion,
minimal documentation, provision for considering proposals suggested by
industry/individual etc., have been introduced. Till date, 36 proposals for
development by industry have been given ‘In-principle’ approval under Make-II.

(f) Government has decided to establish two defence industrial corridors to

serve as an engine of economic development and growth of defence industrial
base in the country. These are spanning across Chennai, Hosur, Coimbatore,
Salem and Tiruchirappalli in Tamil Nadu and spanning across Aligarh, Agra,
Jhansi, Kanpur and Lucknow in Uttar Pradesh (UP).

(g) An innovation ecosystem for Defence titled Innovations for Defence

Excellence (iDEX) has been launched in April 2018. iDEX is aimed at creation
of an ecosystem to foster innovation and technology development in Defence
and Aerospace by engaging Industries including MSMEs, Start-ups, Individual
Innovators, R&D institutes and Academia and provide them grants/funding and
other support to carry out R&D which has potential for future adoption for Indian
defence and aerospace needs.

(h) FDI Policy has been revised and under the revised policy, FDI is allowed
under automatic route upto 49% and beyond 49% through Government route
wherever it is likely to result in access to modern technology or for other reasons
to be recorded28.

(j) The Defence Products List for the purpose of issuing Industrial Licenses
(ILs) under IDR Act has been revised and most of the components, parts, sub-
systems, testing equipment and production equipment have been removed
from the list, so as to reduce the entry barriers for the industry, particularly small

28 Ibid.
 22

& medium segment. The validity of the Industrial Licence granted has been
increased from 03 years to 18 years29.

(k) The process for export clearance has been streamlined and made
transparent & online.

(l) Offset guidelines have been made flexible by allowing change of Indian
Offset Partners (IOPs) and offset components, even in signed contracts.
Foreign Original Equipment Manufacturers (OEMs) are now not required to
indicate the details of IOPs and products at the time of signing of contracts.
‘Services’ as an avenue of offset have been re-instated.

(m) Government has set up the Technology Development Fund (TDF) to

encourage participation of public/private industries especially MSMEs, through
provision of grants, so as to create an eco–system for enhancing cutting edge
technology capability for defence applications.

Atmanirbhar Bharat Abhiyan

44. Atmanirbhar Bharat Abhiyan is the new version of 'Make in India' which was
announced by Hon'ble Prime Minister on 12 th May 2020 with new vision30.
'Atmanirbhar Bharat' represents a comprehensive vision aimed at fostering self-
reliance across various sectors, including defence. At its core, this initiative seeks to
reduce India's reliance on imports and bolster indigenous manufacturing capabilities
to meet domestic demands while also enhancing competitiveness in the global market.
The idea of gaining atmanirbharta in the defence sector stems not merely from the
need for reducing import dependency, but rather to build an ecosystem that positions
India as a global defence exporter.

29 Behera Lakshman Kumar, Indian Defence Industry : An Agenda for Making in India, Pentagon
Press, p.14.
30 Dubey Smita & Harish Kumar, Atmanirbhar Bharat Abhiyan: An Analytical Review, Jul 2020,

https://www.researchgate.net/publication/343139784_ATMANIRBHAR_BHARAT_ABHIYAN_AN_ANA
LYTICAL_REVIEW
 23

45. The Positive Indigenization List (PIL) is an important initiative to encourage

domestic defence production. Several government policies and activities are being
implemented in conjunction with the PIL to promote a domestic ecosystem for defence
manufacturing. An increased focus on crucial defence technologies and increase in
funding for research and development are some of the steps that need to be taken to
address the extant limitations plaguing the domestic defence industry. The PIL intends
to augment the design capabilities of the domestic defence industry, Research &
Development (R&D), and skill-building in human resources and development. It
includes the DPSUs, Ordnance Factory Board (OFB) and the private sector defence
industry. Aside from these four lists, the government had already indigenised 2,500
items31.

46. Under the Aatmanirbhar Bharat Abhiyaan, the government plans to implement
various reforms to lure investors, improve ease of doing business and reinforce the
Make in India initiative. The key features of Aatmanirbhar Bharat mission’s five pillars
are32:-

(a) Economy: Expand the country’s economy to US$ 5 trillion by 2025.

(b) Infrastructure. Invest more than Rs. 10,000,000 crore (US$ 1.3
trillion) in infrastructure expansion over the next five years for achieving the
US$ 5 trillion economy goal.

(c) Systems. Implement systems based on 21st century technologies.

(d) Vibrant Demography. Enhance India’s competitive edge for self-

reliance over the next five years.

(e) Demand. Utilise full resources and capacity.

31 Shayesta Nishat Ahmed, The Fourth Positive Indigenisation List: A Step Forward for India, August
24, 2023, p.4.
32 Aatmanirbharta In Defence, May 11, 2022, https://www.ibef.org/blogs/aatmanirbharta-in-defence
 24

Defence Acquisition Procedure (DAP) - 2020

47. DAP 2020, a product of extensive analysis, deliberations, interactions and

focused formulations, aims to further ‘Self Reliance’ of the country in the defence
sector and implement ‘Ease of Doing Business’ with emphasis on Simplification,
Delegation, Reduced Timelines and making the process as Industry friendly as
possible. The aim of the Defence Acquisition Procedure (DAP), erstwhile Defence
Procurement Procedure (DPP), is to ensure timely acquisition of military equipment,
systems and platforms as required by the Armed Forces in terms of performance,
capabilities and quality standards, through optimum utilisation of allocated budgetary
resources33.

48. Capital Acquisitions. Capital Acquisition schemes are broadly classified

as, ‘Buy’, ‘Buy and Make’, ‘Leasing’, ‘Make’, ‘Design and Development (D & D)’ and
Strategic Partnership Model (SPM). Other Capital Procurement Procedure (OCPP)
may be followed for overhaul, major refits, upgrades and replacement of items of
Capital nature. Under the ‘Buy’ scheme procurements are categorised as ‘Buy (Indian
- IDDM)’, ‘Buy (Indian)’, and ‘Buy (Global)’. Under the ‘Buy and Make’ scheme, the
procurements are categorised as ‘Buy and Make (Indian)’ and Buy (Global -
Manufacture in India).

49. Priority of Categorisation34. Acquisition of defence equipment under this

procedure will be based on the above-mentioned categories. The categories, except
Make, Leasing, D & D and SPM, have been prioritised based on their relative
importance towards indigenisation. However, there is no embargo on a vendor
qualifying in a higher category to participate in the lower category in case all
requirements of the lower category are met. In decreasing order of priority, the priority
of categories will be as follows:-

(a) Buy (Indian – Indigenously Designed Developed and Manufactured) i.e.

Buy (Indian-IDDM).

33 DEFENCE ACQUISITION PROCEDURE 2020, p.1.

34 ibid, p.2.
 25

(b) Buy (Indian).

(c) Buy and Make (Indian).

(d) Buy (Global - Manufacture in India).

(e) Buy (Global).

50. Definition of Acquisition Categories.

(a) Buy (Indian-IDDM). ‘Buy (Indian-IDDM)’ category refers to the

acquisition of products from an Indian vendor that have been indigenously
designed, developed and manufactured with a minimum of 50% Indigenous
Content (IC) on cost basis of the base contract price i.e. total contract price less
taxes and duties35.

(b) Buy (Indian). ‘Buy (Indian)’ category refers to the acquisition of

products from an Indian vendor which may not have been designed and
developed indigenously, having 60% IC on cost basis of the base contract price.
Vendors eligible in ‘Buy (Indian-IDDM)’ category will also be permitted to
participate in this category with indigenous design and a minimum of 50% IC
on cost basis of the base contract price36.

(c) Buy and Make (Indian). ‘Buy & Make (Indian)’ category refers to an
initial acquisition of equipment in Fully Formed (FF) state in quantities as
considered necessary, from Indian vendor(s) engaged in a tie-up with a foreign
Original Equipment Manufacturer (OEM), followed by indigenous production in
a phased manner involving Transfer of Technology (ToT) of critical technologies
as per specified range, depth and scope from the foreign OEM. Under this
category of acquisition, a minimum of 50% IC is required on cost basis of the
Make portion of the contract less taxes and duties37.

35 Ibid, p.2.
36 Ibid, p.3.
37 Ibid.
 26

(d) Buy (Global - Manufacture in India). Buy (Global - Manufacture

in India) category refers to an outright purchase of equipment from foreign
vendors, in quantities as considered necessary, followed by indigenous
manufacture of the entire/part of the equipment and spares/assemblies/sub-
assemblies/Maintenance along with Repair and Overhaul (MRO) facility (only
in cases these are part of the main contract) for the equipment, through its
subsidiary in India/through a Joint Venture/through an Indian Production
Agency (PA) (with ToT of critical technologies as per specified range, depth and
scope to the Indian PA), meeting a minimum of 50% IC on cost basis of the
Base Contract Price. Indian vendors will be permitted to participate in Buy
(Global - Manufacture in India)38.

(e) Buy (Global). ‘Buy (Global)’ category refers to outright purchase

of equipment from foreign or Indian vendors. In case of procurement through
foreign vendors, Government to Government (G2G) route/Inter Government
Agreement (IGA) may also be adopted, for equipment meeting strategic/long
term requirements. An Indian Vendor participating in this category would be
required to meet minimum 30% IC, failing which such vendor would be required
to discharge offsets as applicable in the case. Foreign vendors will need to
discharge offsets in all Buy (Global) cases with Acceptance of Necessity (AoN)
cost of Rs 2000 crores or more, other than all ab-initio Single Vendor Cases,
including procurements based on IGA/FMS39.

Figure 3.1: Category-wise (less Strategic Partnership Model Cases)

Summary of IC as per Cost of the Base Contract Price 40

38 Ibid.
39 Ibid, p.4.
40 Ibid, p.6, Para 21.
 27

51. Indigenous Content (IC). For IC referred to in Paragraphs 53(a) to (e)

above, and stipulated in the RFP for Strategic Partnership model cases, the vendor
will ensure compliance as detailed in Appendix B to Chapter I of DAP 2020.

52. Make Categories. The ‘Make’ Categories aim to achieve the objective of self-
reliance by involving greater participation of Indian industrial eco-system including
private sector through the following procedures41:-

(a) Make-I (Government Funded). Projects involving design and

development of equipment, systems, major platforms or upgrades thereof by
the industry. For Projects under Make-I sub-category, MoD will provide financial
support upto 70% of prototype development cost or maximum Rs 250 crores
per Development Agency (DA). Funding would be released in a phased manner
based on the progress of the scheme, as per terms agreed between MoD and
the DA(s).

(b) Projects Under Make II and Make III. Projects under Make II and
Make III would encompass equipment/ system/ platform or their upgrades or
their sub-systems/ sub-assembly/ assemblies/ components/ materials/
ammunition/ software, primarily for import substitution.

(i) Make-II (Industry Funded). This would include design and

development and innovative solutions by Indian vendor, for which no
Government funding will be provided. In Make-II, where solutions have
been offered even by a single individual or a firm as a Suo-Moto
proposal, the cases would be progressed as a Resultant Single Vendor.
However, SHQ should seek for multivendor options in such cases, if
feasible, before progressing the case as Single Vendor Case.

(ii) Make-III. This although would not be designed/developed

indigenously, but can be manufactured in India as import substitution for
product support of weapon systems/equipment held in the inventory of
the Services. Indian firms may manufacture these either in collaboration

41 Ibid, p.321.
 28

or with ToT from foreign OEMs. In this category, an Indian vendor can
enter into a JV with OEM

Impact on Import & Export of Arms & Equipment

53. Imports. The government under its Make-in-India initiative has been
prioritising to meet its growing defence needs through indigenously designed,
developed and manufactured defence items. India continues to remain the largest
importer of arms in the world. According to the SIPRI 2023 report, with an 11 percent
share of total global arms imports, India was the world’s biggest importer of major arms
during the period 2018 and 2022, a position it has held for the period 1993–2022. It
retained this position even though its arms imports dropped by 11 percent between
2013–17 and 2018–22.

Table 3.2: India’s Arms Imports during the Period 2013-201742

42https://www.vifindia.org/sites/default/files/Indias-Defence-Exports-Recent-Trends-and-the-Way-
Forward.pdf
 29

54. One of the major factors for decrease in India’s arms imports was its efforts to
replace imports with major arms that are designed, developed and manufactured
domestically. In this regard, the government had earlier approved 162 proposals worth
approximately ₹2,51,130 crore (over US $30.738 billion), and in March 2023 over
₹70,500 crore (over US $8.601 billion) for Capital procurement from domestic sources.

55. The earmarking of record 75 percent of defence capital procurement budget in

2023-24 towards buying weapon systems and components from local manufacturers,
along with issuance of four ‘Positive Indigenisation Lists’ of 411 major weapons
platforms/systems and three ‘Positive Indigenization List’ of 3,738 items of DPSUs,
effectively barring import of these items from specified timelines, will further reduce
India’s arms import from foreign sources43.

56. Exports. Through consistent policy initiatives of the Government and

tremendous contribution of the defence industry, India has achieved a remarkable
milestone in defence exports in Financial Year 2022-23. The exports have reached an
all-time high of approx. Rs 16,000 crore, almost Rs 3,000 crore more than the previous
financial year. It a rise of over 10 times since 2016-1744. About 100 Indian defence
companies have exported arms to over 85 countries45 like Armenia, Ethiopia,
Mozambique, Seychelles, Myanmar, Philippines, Bhutan, Bangladesh, Maldives, Sri
Lanka, Nepal, Mauritius, Saudi Arabia and United Arab Emirates (UAE). While India’s
growing defence cooperation with the FFCs have significantly expanded in recent
years and reached in to new level of cooperation that include high-level visits, joint
military exercises, and training. India’s arms exports have added new dimensions to
this evolving defence cooperation. It helps the FFCs meet their defence and security
needs.

43 Ibid.
44 https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=1912885
45 Dr Saroj Bishnoyi,india’s Defence Exports, Sep 2023, p.16

https://www.vifindia.org/sites/default/files/Indias-Defence-Exports-Recent-Trends-and-the-Way-
Forward.pdf
 30

Figure 3.3: India’s Defence Exports over the Last Decade 46

Government’s initiatives to Promote Self-Reliance

57. Government has taken several policy initiatives in the past few years and
brought in reforms to encourage indigenous design, development and manufacture of
Defence equipment by Indian Industry including Micro, Small and Medium Enterprises
(MSME) and Start-ups, thereby promoting self-reliance in defence manufacturing &
technology in the country47. Some of the initiatives taken to facilitate MSMEs/ start-
ups are as follows:

(a) Promotion under various scheme like Innovation for Defence Excellence
(iDEX), Technical Development Fund (TDF), Make project of Defence
Acquisition Procedure (DAP) 2020, encourage participation of MSMEs/start-

46https://twitter.com/rajnathsingh/status/1641999409188839425?ref_src=twsrc%5Etfw%7Ctwcamp%5

Etweetembed%7Ctwterm%5E1642002994697850880%7Ctwgr%5Ef163aa3fcd54f022b573f5683e878
c647793fd72%7Ctwcon%5Es3_&ref_url=https%3A%2F%2Fwww.pib.gov.in%2FPressReleaseIframe
Page.aspx%3FPRID%3D1912885
47 https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1947700
 31

ups in development of Defence Products. Many MSMEs & start-ups are

involved in design & development of defence products under these schemes.

(b) To bring MSMEs into the defence supply chain and thereby boost the
self-reliance of the country in defence and also contribute towards defence
exports market, DDP has made a scheme of promotion of MSMEs in defence.
Under this scheme funds are provided to industry associations to organise
seminars in different parts of the country.

(c) For procurement cases where the estimated cost is not exceeding Rs
100 crores/ year based on delivery schedule at the time of seeking Acceptance
of Necessity (AoN) or Rs 150 crore48, whichever is higher, to encourage the
start-ups/ MSMEs and build Industrial ecosystem, the recognised start-ups/
MSMEs in the relevant fields may be considered for issue of Request For
Proposal (RFP) without any stipulation of financial parameters except
Insolvency and with General and Technical parameters to be decided on case
to case basis.

(d) Reforms in Offset policy with thrust on attracting investment and Transfer
of Technology (ToT) for Defence manufacturing by assigning higher multipliers.

(e) EMD/Bank Guarantee is not required from Micro and Small Enterprises
(MSEs) as defined in MSE Procurement Policy issued by Department of Micro,
Small and Medium Enterprises (MSME).

(f) Public Procurement Policy for MSEs Order, 2012 has been implemented
at DPSUs under which the price preference is given to MSME bidders under
certain conditions.

(g) To encourage start-ups and MSMEs to invest/business in defence

manufacturing sector, Rs 1,500 crore has been earmarked in Financial Year
2023-24 for start-ups and MSMEs from the budget earmarked for procurement
through Domestic Private Industries (DPI) which is to the tune of Rs 24,805.76

48 Ibid.
 32

crore49. Provisions of Department for Promotion of Industry and Internal Trade

(DPIIT) in respect of start-ups/MSMEs is being complied with while procuring
items from start-ups/MSMEs.

58. In conclusion, the Government of India's approach to defence equipment-

related issues is characterized by a comprehensive strategy aimed at modernizing the
armed forces, promoting indigenous manufacturing, fostering innovation, and
enhancing self-reliance in defence production. Through proactive policies, strategic
partnerships, and investments in research and development, the government is
working towards building a robust defence ecosystem capable of meeting the nation's
security imperatives and positioning India as a global leader in defence manufacturing
and technology.

49 Ibid.
 33

CHAPTER IV

THE BIG IMPACT

“Innovation is critical and it has to be indigenous. Imported goods

can’t be a source of innovation”
- Narendra Modi50
Prime Minister

Reforms: Ordnance Factory Board

59. The Ordnance Factory Board (OFB) has been restructured into seven new
corporate entities as part of the corporatization process. These new entities are aimed
at enhancing efficiency, productivity, and competitiveness in India's defence
manufacturing sector. These new corporate entities have been formulated based on
their roles as under51:-

(a) Ammunition and Explosives Group. This entity is primarily engaged

in the production of various calibers of ammunition and explosives, with
significant potential for growth.

(b) Vehicles Group. Focused on the production of military vehicles,

including armored and infantry combat vehicles, to meet the defence
requirements.

(c) Weapons and Equipment Group. Responsible for manufacturing

small arms, aircraft weapons, naval weapons, anti-tank warfare equipment,
missiles, rockets, grenades, mortars, mines, and other related products.

50 https://www.narendramodi.in/text-of-prime-minister-narendra-modi-s-address-at-niio-seminar-
swavlamban-in-new-delhi-563228
51 https://theprint.in/defence/ordnance-factory-boards-corporate-makeover-the-plan-how-it-impacts-

indias-arms-production/680484/
 34

(d) Optoelectronics Group. Specializes in the production of

optoelectronic devices for defence applications, contributing to enhancing
technological advancements in the sector.

(e) Metals and Alloys Group. Engaged in the production of metals,

alloys, machine tools, engines, propellants, explosives, and other related
materials essential for defence manufacturing.

(f) Parachutes Group. Focuses on the production of parachutes for

various defence applications to support airborne operations and personnel
safety.

(g) Clothing and Textiles Group. Responsible for manufacturing

clothing items required by the armed forces, ensuring high-quality uniforms and
gear for military personnel.

60. The production units of the Ordnance Factory Board (OFB) have been
transformed into seven Defence Public Sector Undertakings (DPSUs), with a total of
41 units. This transformation took effect from October 1, 202152. The details of these
newly formed DPSUs are as under:-

(a) Munitions India Limited (MIL) (Ammunition & Explosives).

Headquarters at Khadki, Pune.

(i) Units. Ammunition Factory Khadki. Cordite Factory

Aruvankadu, High Energy Projectile Factory Tiruchirapalli, High
Explosive Factory Khadki, Ordnance Factory Bhandara, Ordnance
Factory Bolangir, Ordnance Factory Chanda (Chandrapur), Ordnance
Factory Dehu Road, Ordnance Factory Itarsi, Ordnance Factory
Khamaria, Ordnance Factory Nalanda and Ordnance Factory
Varangaon.

52 OFB’s Converted Into 7 DPSU’s With 41 Units, December 20, 2021,

https://www.iadb.in/2021/12/20/ofbs-converted-into-7-dpsus-with-41-units/
 35

(b) Armoured Vehicles Nigam Limited (AVANI) (Vehicles).

Headquarters at Avadi, Chennai

(i) Units. Engine Factory Avadi, Heavy Vehicle Factory Avadi,

Machine Tool Prototype Factory Ambernath, Ordnance Factory Medak
and Vehicle Factory Jabalpur.

(c) Advanced Weapons and Equipment India Limited (AWE India)

(Weapons & Equipment). Headquarters at Kanpur.

(i) Units. Field Gun Factory Kanpur, Gun Carriage Factory

Jabalpur, Gun and Shell Factory Cossipore, Ordnance Factory Kanpur,
Ordnance Factory Project Korwa, Ordnance Factory Tiruchirapalli, Rifle
Factory Ishapore and Small Arms Factory Kanpur.

(d) Troop Comforts Limited (TCL) (Troop Comfort Items).

Headquarters at Kanpur.

(i) Units. Ordnance Clothing Factory Avadi, Ordnance

Clothing Factory Shahjahanpur, Ordnance Equipment Factory Kanpur
and Ordnance Equipment Factory Hazratpur.

(e) Yantra India Limited (YIL) (Ancillary). Headquarters at Nagpur.

(i) Units. Grey Iron Foundry Jabalpur, Metal and Steel

Factory Ishapore, Ordnance Factory Ambernath, Ordnance Factory
Ambajhari, Ordnance Factory Bhusawal, Ordnance Factory Dumdum,
Ordnance Factory Katni and Ordnance Factory Muradnagar.

(f) India Optel Limited (IOL) (Opto-Electronics). Headquarters at

Dehradun.

(i) Units. Ordnance Factory Chandigarh, Ordnance Factory

Dehradun, Opto-Electronics Factory Dehradun.
 36

(g) Gliders India Limited (GIL) (Parachute). Headquarters at Kanpur.

(i) Units. Ordnance Parachute Factory Kanpur.

61. With professional management, functional and financial autonomy and more
accountability, this restructuring is aimed at transforming Ordnance Factories into
productive and profitable assets, enhance competitiveness and improving efficiency53.

Milestones Achieved

62. Important Defence Items Manufactured in India. In recent years, India

has pushed the policy of ‘Make in India’ in the defence sector, which is implemented
through various policy initiatives that promotes indigenous design, development, and
manufacture of defence items. The initiatives for encouraging indigenous production
of defence items, inter-alia, include priority for procurement of capital items from
domestic sources under the Defence Acquisition Procedure 2020, simplification of the
industrial licencing process with longer validity, liberalisation of FDI, and

Figure 4.1: Indian Defence Production Value54

sourcing of items from the Positive lists. Many significant projects, including the 155
mm Artillery Gun system ‘Dhanush’, Bridge Laying Tank, Thermal Imaging Sight

53 Ibid.
54 Defence Manufacturing, Dec 2023, p.7, www.ibef.org
 37

Mark-II for T-72 Tank, Light Combat Aircraft ‘Tejas’, ‘Akash’ Surface to Air Missile
System, Submarine ‘INS Kalvari’, ‘INS Chennai’, Anti-Submarine Warfare Corvette,
Arjun Armoured Repair and Recovery Vehicle, Landing Craft Utility, etc., have been
produced in the country under ‘Make in India’ initiative of the government in the last
few years55.

63. Exports. Some of the major items exported in the past few years are Fast
Speed Patrol Boats, Coastal Surveillance System, Light Weight Torpedoes, Light
Weight Torpedo Launcher and parts, Dornier-228 Aircraft, Wheeled Infantry Carrier,
Light Specialist Vehicle, Mine Protected Vehicle, Passive Night Sights, Battle Field
Surveillance Radar Extended Range, Integrated Anti-Submarine Warfare, Advanced
Weapons Simulator, Personal Protective Items, 155 mm Artillery Gun Ammunition,
Small Arms and Ammunitions, Weapon locating Radars, Identification of Friend or Foe
-Interrogator, etc. India is also exporting BrahMos missiles that are manufactured in
India in collaboration with Russia56.

Figure 4.2: Indian Defence Production Value57

64. Since their inception, these DPSUs have started exploring avenues to expand
their business and had adopted an aggressive approach towards diversifying their

55 Growing Indian Defence Production Capabilities: From the biggest Importer of Defence Equipment
to an Exporter,
https://www.usiofindia.org/publication-journal/Growing-Indian-Defence-Production-Capabilities-From-
the-biggest-Importer-of-Defence-Equipment-to-an-Exporter.html
56 https://brahmos.com/pressRelease.php?id=105.
57 https://www.orfonline.org/research/policy-recommendations-for-achieving-india-s-defence-export-

ambitions
 38

customer base and product profile. During the last one year, the new companies have
obtained domestic orders of more than Rs 7,200 crore value58.

Market Analysis of India's Defence Sector

65. India's defence industry is undergoing significant developments in terms of

imports, exports, and strategic partnerships. Here are some key points from the market
analysis59:-

(a) Dependency on Foreign Sources. Despite efforts to promote

indigenous manufacturing, India still heavily relies on foreign sources for
defence equipment, especially in critical areas like advanced aircraft, naval
vessels, and missile systems.

(b) Diversification of Suppliers. India has diversified its defence

suppliers beyond Russia to include countries like the United States, Israel,
France, and the United Kingdom. This diversification strategy aims to reduce
risks associated with over-reliance on a single supplier and enhance bargaining
power and technological access.

(c) Technology Transfer and Collaboration. Defence imports not only

meet immediate operational needs but also facilitate technology transfer and
collaboration with foreign partners. Strategic procurement agreements often
include provisions for co-production, technology transfer, and offsets,
contributing to enhancing India's indigenous capabilities in the long term.

(d) Growth Potential. India's defence exports have shown significant

growth, reaching an all-time high in recent years. Leveraging indigenous
manufacturing capabilities, technological expertise, and strategic partnerships
has positioned India as a competitive supplier of defence equipment globally.

58 PIB Delhi, 30 Sep 2022, https://pib.gov.in/PressReleasePage.aspx?PRID=1863733

59 Jayant Kumar Roy, Exploring the Rise of India's Defence Exports, 24 April, 2023,
https://www.investindia.gov.in/team-india-blogs/exploring-rise-indias-defence-exports
 39

(e) Targeted Markets. India focuses on exporting defence

equipment to friendly countries, strategic partners, and emerging markets in
Asia, Africa, and the Middle East. This deliberate strategy aims to expand
influence and enhance bilateral and regional security cooperation by offering
tailored solutions to customer countries.

(f) Brand Recognition. Notable exports like the BrahMos supersonic

cruise missile and Dhruv helicopters serve as flagship products showcasing
India's technological prowess. These exports contribute to enhancing India's
brand recognition and credibility in the global defence industry.

66. These trends reflect India's evolving position in the global defence market,
emphasizing a shift towards self-reliance, strategic partnerships, and export-oriented
growth strategies.

Positive and Negative Indigenisation List

67. Positive Indigenisation List (PIL). The Positive Indigenisation List (PIL)
in India's defence sector essentially means that the Armed Forces—Army, Navy, and
Air Force—will exclusively procure the listed items from domestic manufacturers,
whether from the private sector or Defence Public Sector Undertakings (DPSUs). This
concept was introduced in the Defence Acquisition Procedure (DAP) 2020 to promote
self-reliance, boost domestic defence manufacturing, and reduce dependency on
imports60.

(a) Purpose. The PIL entails that the Indian Armed Forces, including the
Army, Navy, and Air Force, will exclusively procure listed items from domestic
manufacturers, whether from the private sector or Defence Public Sector
Undertakings (DPSUs). This list promotes self-reliance, boosts domestic
defence manufacturing, and reduces dependency on imports61.

60 Positive Indigenisation List, 02 Jun 2021, https://www.drishtiias.com/daily-news-analysis/positive-

indigenisation-list
61 https://www.drishtiias.com/daily-updates/daily-news-analysis/4th-positive-indigenisation-list
 40

(b) Indigenisation Process. The PIL focuses on indigenization and in-

house development through various routes under the 'Make' category. It
encourages the utilization of Micro, Small, and Medium Enterprises (MSMEs)
and the private Indian industry to enhance domestic manufacturing capabilities
and foster innovation within the defence sector.

68. Negative Indigenisation List. The Negative Indigenisation List, which has
been renamed as the Positive Indigenisation List, consists of items earmarked for
reducing imports by indigenizing their production within India. This list identifies
specific sub-systems or components that are currently imported but are targeted for
domestic production to decrease reliance on foreign sources in the defence sector62.

(a) Purpose. The Negative Indigenisation List comprises items that are
earmarked for reducing imports by indigenizing their production within India.
These lists identify specific sub-systems or components that are currently
imported but are targeted for domestic production to decrease reliance on
foreign sources.

(b) Import Substitution. The Negative Indigenisation List focuses on

import substitution by identifying critical defence items for local production. It
aims to reduce dependency on foreign suppliers and enhance indigenous
manufacturing capabilities in strategic areas of defence equipment

Defence Industrial Corridors in India

69. In February 2018, the Government decided to establish two Defence Industrial
Corridors (DICs) in Uttar Pradesh and Tamil Nadu to serve as an engine of economic
development and growth of defence industrial base in the country63. Five nodes have
been identified for developing the Tamil Nadu Defence Industrial Corridor (TNDIC),
namely Chennai, Coimbatore, Hosur, Salem, and Tiruchirappalli. Similarly, the UP
Defence Industrial Corridor (UPDIC) connects six nodes, i.e. Agra, Aligarh, Chitrakoot,

62 https://www.thehindu.com/news/national/defence-ministry-notifies-second-negative-import-
list/article34690749.ece
63 REFORMS IN DEFENCE SECTOR, Propelling Private Sector Participation, (2014 - 2021), p.11
 41

Jhansi, Kanpur and Lucknow. These nodes have been selected to harness and
channelize the defence manufacturing potential that exists within the MSMEs, OFB
and DPSUs in and around these areas. A number of private industries have either
already invested in or have plans to invest in these DICs.

Figure 4.3: Indian Defence Industrial Corridors64

70. The two defence corridors in Uttar Pradesh and Tamil Nadu have signed 158
memorandums of understanding (MoUs) with industries representing investments
worth Rs. 23,933 crore (US$ 2.92 billion)65.

64 Defence Corridors & State Defence Policies, https://www.sidm.in/state-defence-policies

65Defence Manufacturing, Dec 2023, p.14, www.ibef.org
 42

CHAPTER V

WAY AHEAD

“The negligence of a few could easily send a ship to the bottom. But if it has the
wholehearted co-operation of all on board, it can be safely brought to the port.”
- Sardar Vallabhbhai Patel66

“I am confident that India will emerge as a major global centre for defence industry.
We have the basic building blocks for it in India; and, a large nation requirement.
We will build an industry that will have room for everyone – public sector,
private sector and foreign firms.”
- Prime Minister Narendra Modi67

Introduction

71. In recent conflicts, we have seen the importance of new defence equipment
such as drones, anti-drone systems, missiles, air-defence systems, etc. Countries at
war have struggled to get reliable supplies during a tough time. Therefore, India can’t
afford to rely on the external supply of equipment and critical components. Thus,
pushing for localisation of production is essential, which will generate large and
sustainable opportunities for domestic players.

72. “In addition, the Ministry of Defence has banned the import of several
components over a period of time, thus encouraging indigenisation. This clearly shows
the favourable tilt of policy framework for defence companies,” says Gaurav Dua,
head, Capital Market Strategy, Sharekhan by BNP Paribas68. Indigenisation in the

66 https://www.wewishes.com/sardar-patel-quotes
67 https://defenceindustry.in/defence-aerospace-market/future-trends/
68 NASRIN SULTANA, Why India's defence sector is booming, Dec 1, 2022,

https://www.forbesindia.com/article/take-one-big-story-of-the-day/why-indias-defence-sector-is-
booming/81639/1
 43

defence sector refers to increasing manufacturing capacity within the country, create
research and development, and boost exports.

73. The government has introduced a series of booster schemes and measures
that have resulted in a steady flow of capital and investment opportunities in the sector.
The cumulative FDI inflow in the defence industry stands at $15.71 million, during the
period April 2000 to September 2022, according to the Make in India website. Earlier
in 2020, the government had increased the FDI limit to 74 percent from 49 percent,
under the automatic route, and up to 100 percent through the government route in the
defence sector.

Figure 5.1: Performance of Key Defence Companies for Q2 FY23 69

74. According to government data, India has around 194 defence start-ups building
innovative tech solutions. The government has set a target of Rs 1.75 lakh crore of
defence production by 2025, which includes export of Rs 35,000 crore. The Budget
outlay for FY23 has been fixed at Rs 5.3 trillion, a 10 percent increase over last year70.

69 Ibid.
70 https://inc42.com/resources/decoding-the-defence-tech-opportunity-in-india/
 44

Strategies for Self-Reliance

75. To achieve self-reliance in defence manufacturing, India needs to adopt a

multi-pronged approach: -

(a) Invest in R&D. India needs to invest heavily in research and

development (R&D) to indigenize critical technologies and reduce reliance on
foreign sources. This includes establishing research institutions, collaborating
with academia and industry, and fostering innovation71 .

(b) Streamline Procurement. The government should streamline

the defence procurement process to make it more efficient and transparent.
This will reduce delays, encourage private sector participation, and ensure
timely acquisition of critical equipment72.

(c) Encourage Private Sector Participation. The government should

create a conducive environment for private sector participation in defence
manufacturing. This includes providing incentives, simplifying regulations, and
facilitating technology transfer73.

(d) Foster Collaboration. India should foster collaboration with global

defence partners to access advanced technologies, expertise, and co-
development opportunities. These partnerships can accelerate India's progress
towards self-reliance74.

Support for MSMEs and Start-Ups

76. The promotion of Indian defence start-ups and Micro, Small, and Medium
Enterprises (MSMEs) is a crucial aspect of the Atmanirbhar Bharat (Self-Reliant India)
initiative, aimed at enhancing domestic production and reducing dependency on

71 India’s Defence Sector A Journey Towards Self Reliance, 15 Feb 24,

https://www.narendramodi.in/indias-defence-sector-a-journey-towards-self-reliance-579488
72 REFORMS IN DEFENCE SECTOR, Propelling Private Sector Participation, (2014 - 2021)
73 Ibid.
74 Ibid.
 45

imports in the defence sector. Following are the government initiatives and policies
depicting how these entities are being encouraged to contribute to India's defence
industry:-

(a) Defence Production Milestone. India's defence production has

surpassed Rs 1 lakh crore, with a significant contribution from MSMEs and
startups. The government's efforts to integrate these entities into the defence
supply chain have led to a remarkable increase in defence licenses issued to
industries, fostering sector growth75.

(b) Policy Measures. The Ministry of Defence has implemented

policy measures to drive the participation of MSMEs and startups in the defence
industry. These initiatives have resulted in a substantial increase in defence
production value, exceeding Rs 1 lakh crore in FY 2022-2376.

(c) Defence India Startup Challenge. The Defence India Startup

Challenge, launched by the Ministry in partnership with Atal Innovation Mission,
aims to support startups, MSMEs, and innovators in creating prototypes and
commercializing products/solutions for national defence and security. Selected
applicants receive funding, mentorship, access to testing facilities, and other
support to bring their innovations to market77.

(d) iDEX Initiative. The Innovations for Defence Excellence (iDEX)

scheme has been approved with budgetary support to nurture nearly 300
startups/MSMEs/individual innovators. This initiative aims to promote self-
reliance, innovation, and technology development in the defence sector.
Various programs like Dare to Dream contest and Technology Development
Fund (TDF) Scheme have been launched to support startups and innovators
contributing to the defence ecosystem78.

75 Swati Dayal, ‘MSMEs and Startups Fuel India’s Defence Industry growth’, 19 May 23,
https://www.tice.news/tice-trending/msmes-startups-india-defence-industry
76 Ibid.
77 https://www.makeinindiadefence.gov.in/pages/defence-india-startup-challenge
78 Jatin Karani & Karan Goshar, ‘Decoding The Defence Tech Opportunity In India’, 10 Jun 23,

https://inc42.com/resources/decoding-the-defence-tech-opportunity-in-india/
 46

(e) MSME Support. The government has introduced various measures

such as FDI limit increases, indigenization of imported spares, realistic setting
of requirements, trial procedure overhauls, and more to boost domestic
production in the defence sector. These initiatives aim to engage a higher
number of MSMEs in defence projects and enhance indigenization efforts79.

77. Furthermore, constant support to the MSMEs and Defence Startups and
monitoring their progress is the need of the hour. The government must continue to
fund and promote these industries so as to tap their maximum potential. Some of the
defence startups in India that have contributed significantly to the country's
indigenization efforts include80:-

(a) IdeaForge. A Mumbai-based startup specializing in Vertical Take-off

and Landing (VTOL) UAVs, playing a crucial role in enhancing India's defence
technology capabilities.

(b) Tonbo Imaging. Known for its advanced imaging and sensor
systems tailored for defence applications, including night vision cameras,
thermal imagers, and situational awareness systems.
(c) Bharat Forge. Venturing into the defence sector with a focus on
artillery systems, combat vehicles, and aerospace components, showcasing
advanced engineering capabilities.

(d) Astra Microwave. Specializing in microwave products and solutions

for the defence and aerospace sectors, offering radar systems, electronic
warfare systems, and communication equipment tailored to defence industry
needs.

(e) Zen Technologies. It specialises in the development of simulation-

based training solutions for the defence and security sectors. Their virtual and

79 MSMEs: An untapped force multiplier for the Indian defence sector, May 2020,
https://assets.kpmg.com/content/dam/kpmg/in/pdf/2021/03/msmes-an-untapped-force-multiplier-for-
the-indian-defencesector.pdf
80 Swati Dayal, ‘MSMEs and Startups Fuel India’s Defence Industry growth’, 19 May 23,

https://www.tice.news/tice-trending/msmes-startups-india-defence-industry
 47

augmented reality platforms enable realistic training scenarios for soldiers,

enhancing their operational readiness.

Offset Policy

78. The offset policy was introduced in the Defence Procurement Policy (DPP)
2005, as a supplement to India’s mission of 5 Department of Defence Production
website improving self-reliance and reducing dependence on imports to meet its
requirement for defence equipment. According to this, any capital acquisition
categorised as “Buy (Global)” or “Buy and Make with Transfer of Technology (ToT)”,
with a value of INR 2000 crores or more the OEMs are required to discharge a
minimum of 30% of the contract value as offsets81. The offset discharge can be done
through 06 different avenues which are as follows:-

(a) Export – Direct purchase of, or executing export orders for, eligible
defence products and services.

(b) Foreign Direct Investment (FDI) – FDI for manufacture and/or

maintenance of eligible products or provision of eligible services.

(c) Transfer of Technology (ToT) to an Indian enterprise – Investment

through Transfer of Technology to private sector Indian Offset Partners (IOPs)
for manufacture and/ or maintenance of eligible products or provision of eligible
services.

(d) Transfer of equipment to an Indian enterprise – Investment through

Transfer of equipment to private sector IOPs for manufacture and/ or
maintenance of eligible products or provision of eligible services.

(e) ToT and/or transfer of equipment to government institutions – Transfer

of technology or provision of equipment to government entities engaged in

81 https://pib.gov.in/PressReleasePage.aspx?PRID=1513013
 48

manufacture and/or maintenance of eligible products or provision of eligible

services.

(f) Technology acquisition by DRDO – Transfer of critical technologies to

DRDO in certain high technology areas.

Challenges Related to the Defence Sector in India82

79. High Dependence on Imports. The defence sector in India relies heavily
on imports, and changing geopolitical circumstances cause it to be delayed. For
instance, amid the Russia-Ukraine war, India is awaiting the delivery of the S-400 Air
Defence Systems under a deal signed in 2018. In addition, several new deals are in
line including 12 Sukhoi-30MKI aircraft and 21 MiG-29 fighter jets for the Indian Air
Force.

80. Narrow Private Participation. Private sector participation in the defence

sector is constrained by the lack of a conducive financial framework, that means our
defence production is unable to benefit from modern design, innovation, and product
development83.

81. Lack of Critical Technology. Lack of design capability, inadequate R&D

investment, inability to manufacture major subsystems and components hamper
indigenous manufacturing. Also, the relationship between R&D institutions, production
agencies (public or private) and end-users is extremely fragile84.

82. Lack of Nexus Between Stakeholders. India's defence manufacturing

capability is hindered by overlapping requirements of the armed forces, Ministry of
Defence and the Ministry of Heavy Industries.

82 Richard A. Bitzinger, ‘The Indian Defence Industry: Struggling with Change’,

https://academic.oup.com/book/7884/chapter-abstract/153119364?redirectedFrom=fulltext
83 https://www.drishtiias.com/daily-updates/daily-news-editorials/atma-nirbhar-defence-production
84 Ibid.
 49

What Should be the Way Forward?85

83. Indigenisation with Private Boom. There is a need to revitalise and

regulate entry points for Private sector to enter in defence production embracing
sustainable design and development to meet the needs of Indian Armed Forces in
coming years.

84. Defence Industrial Corridors (DICs)86. It is necessary to extend

dedicated defence industrial corridors across the length and breadth of the country in
order to harness and channel the potential of Indian MSMEs and DPSUs in the
defence manufacturing sector, as well as to facilitate the smooth transit of raw
materials. Government’s initiative to establish two Defence Industrial Corridors (DICs)
in Uttar Pradesh and Tamil Nadu is a welcome step in this direction and more such
corridors should be explored.

85. Defence Investor Cell. It is necessary to strengthen investment in defence

by providing entrepreneurs/industry with a single point of contact to deal with all
defence production-related queries, procedures and regulatory requirements for
investment in the sector. The SRIJAN portal can be linked with Investment Cell87.

86. Inclusion of Defence Entrepreneurs in Policy Making. Through

streamlining procurement and shaking hands with newer defence entrepreneurs for
better policy making and implementation, can reduce the qualitative and quantitative
gaps in its defence sector.

87. Tapping the World’s Defence Market. There is also a need to give
adequate attention to the promotion of exports of Indian Defence products.

88. Strengthening Economy with Strategic Independence. Indigenised

India’s defence sector would further strengthen the economy by generating
employment opportunities and saving the exchequer by reducing the import burden.

85 https://www.drishtiias.com/daily-updates/daily-news-editorials/atma-nirbhar-defence-production
86 https://www.sps-aviation.com/story/?h=Defence-Industrial-Corridors&id=2470
87 https://www.investindia.gov.in/sector/defence-manufacturing
 50

Self-Reliance: The Cornerstone of Defence Strength.

89. Self-reliance is the cornerstone of India's defence strength. Reducing reliance

on imports for critical defence equipment and technologies is crucial for ensuring the
timely availability of essential military hardware and safeguarding sensitive
technologies88. This can be achieved by addressing two major aspects:-

(a) Investing in R&D. India must significantly increase its investments

in research and development (R&D) to develop indigenous defence
technologies and reduce reliance on foreign sources. This includes establishing
research institutions, collaborating with academia and industry, and fostering
innovation.

(b) Strengthening Domestic Manufacturing. India needs to

strengthen its domestic manufacturing capabilities by upgrading infrastructure,
providing incentives to private sector participation, and streamlining regulatory
processes. This will enable India to produce high-quality defence equipment
domestically, meeting the needs of its armed forces and reducing import
dependence.

Innovation-Driven Defence Transformation

90. Innovation is the driving force behind defence transformation. Embracing

innovation is essential for developing next-generation defence technologies, staying
ahead of adversaries, and maintaining a technological edge. This requires:-

(a) Creating an Ecosystem for Innovation. India should foster an

ecosystem for innovation by encouraging collaboration between academia,
industry, and government. This will promote the exchange of ideas, accelerate

88Ankit Kapoor, “Evaluating the Make in India Policy for Defence Manufacturing and Technology
Acquisition,”
Peninsula.Org, January 11, 2021, https://www.thepeninsula.org.in/2021/01/11/evaluating-the-make-in-
india policy-for-defence-manufacturing-and-technology-acquisition/
 51

technology transfer, and support the development of cutting-edge defence

solutions.

(b) Investing in Emerging Technologies. India must invest in

emerging technologies such as artificial intelligence, cybersecurity, and
hypersonic to stay at the forefront of defence innovation. This will enable India
to develop advanced defence capabilities and maintain a technological
advantage.

Analysis of Data and Conclusion

91. Close Ended Survey. The data was collected from 147 respondents
through a set of 12 closed-ended questions. The respondents are people from various
backgrounds, with defence being the background of the majority with 143
respondents. Of the 147 respondents, 122 were under 10 years of service, 6 were
between 10 and 15 years, 12 were of service more than 15 years and 7 were retired.
The varied service brackets of respondents helped in the holistic analysis of the
problem.

Figure 5.2: Arm/ Service Background

 52

Figure 5.3: Years of Service

Descriptive Analysis of Questions

92. The responses to each question are analysed as under:-

(a) Question 1. The survey results overwhelmingly indicate that the

vast majority of respondents (91.8%) had moderate or greater awareness of
‘Atmanirbhar Bharta’ and ‘Make in India’ initiatives. Only 8.2% respondents
indicated slight awareness about the schemes.

Figure 5.4: Awareness of Indigenisation Initiatives

(b) Question 2. The survey results reveal a strong consensus that a

self-reliant defence industry is very important for a nation. A significant majority
of respondents (83.7%) considered it very important while 14.3 % also
 53

considered the same to be important. In contrast, only a small minority (2%)

chose to remain neutral.

Figure 5.5: Importance of Self-Reliant Defence Industry

(c) Question 3. The survey results indicate that a clear majority of

respondents (93.2%) agree with the statement that these initiatives have
promoted new private players including MSMEs and start-ups, to come up with
significant products and ideas in the recent years. While 44.9% strongly agree,
an equal proportion of 48.3% simply agree. This suggests that the MSMEs and
Startups have indeed come up with excellent ideas and products for
improvement of indigenous defence industry. The balance 6.8% who remained
neutral or disagreed may require additional information or clarification on the
scope of existing research before forming an opinion.

Figure 5.6: Promotion of MSMEs & Start-ups

(d) Question 4. The survey results overwhelmingly reveal that a

vast majority of respondents (91.2%) believe that the 'Atmanirbhar Bharat'
 54

initiative has contributed to enhancing India's indigenous defence production. A

substantial majority (48.3%) think it contributed ‘Significantly’, while a significant
minority (42.9%) think the contribution was ‘Moderately’. This suggests a broad
consensus that the initiatives have made a noteworthy contribution to enhance
the indigenous defence production, with only a small minority (8.9%) believing
the contribution to be slight or non-existent.

Figure 5.7: Extent of ‘Atmanirbhar Bharat’ Initiative’s Contribution

(e) Question 5. The survey results suggest that the respondents

have noticed changes in the availability/ production of indigenous defence
equipment since the implementation of the 'Make in India' initiative. While a
majority (45.6%) believes that there was a moderate increase, a substantial
minority (30.6%) considers the increment to be significant. Also, a small minority
(19.7%) believes that there was only a slight increase. This indicates that the
though there was an increase in the production of indigenous defence
equipment, it’s effect it yet to be observed significantly among the masses. Few
respondents (4.1%) also believed that there was no change or decrease in
production.
 55

Figure 5.8: Changes in Availability/ Production of Indigenous Equipment

(f) Question 6. The survey indicates that two-third majority of

respondents believe that 'Atmanirbhar Bharat' and 'Make in India' initiatives
have reduced India's dependency on foreign defence imports. While 55.8%
respondents agree, another 15.6% strongly agree to this statement. A
significant 12.9% respondents disagree with the statement. This highlights the
fact that India is still the second largest arms importer in the world as per the
SIPRI’s data of 2022.

Figure 5.9: Reduction of Dependency on Foreign Imports

(g) Question 7. The survey results reveal that the respondents find
the policies and incentives introduced under these initiatives promote
indigenous defence production with a significant majority (60.5%) believing so.
22.4% believe that the policies and incentives are ‘very effective’ while 14.3%
feel that they are only ‘slightly effective’ in promoting indigenous defence
production. A mere 2.7% respondents marked them ineffective. These findings
 56

highlight that the government has taken significant steps in boosting the
defence production, though the outcome will take a considerable time to come
into effect.

Figure 5.10: Effectiveness of Policies & Incentives

(h) Question 8. The survey results suggest that barring 11 (7.5%)

respondents, 92.5% agree or strongly agree that the 'Atmanirbhar Bharat' and
'Make in India' initiatives have encouraged innovation and technological
advancements in India's defence sector. The neutral vote (5.4%) suggests a
lack of clarity or awareness about the impact of these policies.

Figure 5.11: Encouragement to Innovation & Technological Advancement

(j) Question 9. The survey results reveal a strong consensus that

India is facing a mix of challenges in achieving self-reliance in its defence sector
with a 45.6% majority stating that the challenges are multiple. 25.9% believe
the reason is technological gap, while 16.3% state budget constraints as their
choice. Poor policies of the government and shortage of skilled manpower are
 57

other major reasons chosen by 6.8% and 3.4% respondents respectively. This
signifies that there is a need to address these issues especially technological
gap and also allot adequate budget to boost R&D and support the defence
industries in the country.

Figure 5.12: Challenges in Achieving Self-Reliance

(k) Question 10. On asking if these initiatives have addressed

challenges such as bureaucracy and red-tapism in the defence procurement
process effectively and promoted fast-track induction of eqpt into the inventory
of the Armed Forces, the survey results reveal a mixed response. Though a
majority (55.1%) of respondents either ‘strongly agreed’ or ‘agreed’ that the
challenges have been addressed, a significant 44.9% either remained ‘neutral’
or ‘disagreed’ to the question. This signifies that there is still no consensus
among the masses about the perceived challenges of bureaucracy and red-
tapism and further steps are required to be taken by the government to ensure
transparency.

Figure 5.13: Challenges of Bureaucracy & Red-Tapism

 58

(l) Question 11. The survey overwhelmingly indicates that the

majority of respondents (90.5%) believe that ‘Atmanirbhar Bharat’ and ‘Make in
India’ initiatives have made a significant impact on India’s indigenous defence
production. A significant 61.2% and 29.3% rated the impact to be ‘moderately
positive’ or highly positive’ respectively. While a small minority (9.5%) remained
neutral, or thought the impact was moderately or highly negative, their voices
are overshadowed by the overwhelming majority who believe that these
initiatives do have a positive impact on indigenous defence production.

Figure 5.14: Overall Impact

(m) Question 12. The survey results indicate that a vast majority of
respondents (56.6%) consider a combination of technological & skill
development as well as infrastructure improvement to be the focus areas to
further enhance indigenous defence production. Technological development
and infrastructure improvement were the key areas selected by 15%
respondents each. Only a small minority (6.8% each) think skill development
and policy reforms too need to be focused upon. These findings highlight that
India possesses the requisite skills, and amendments to policy have been
made. Now it is high time to shift the focus on development of technology as
well as building & improving infrastructure to support the indigenisation drive in
the country.
 59

Figure 5.15: Key Focus Areas

Overall Analysis of the Survey

93. These survey results underscore the general consensus on the importance and
positive impact of the 'Atmanirbhar Bharat' and 'Make in India' initiatives in bolstering
India's indigenous defence production, while also highlighting areas for improvement
such as addressing challenges and focusing on technology development and
infrastructure enhancement to sustain growth in the sector. Some key highlights of the
survey are as under:-

(a) Importance of Self-Reliant Defence Industry. A vast majority of

respondents (83.7%) consider a self-reliant defence industry as ‘very
important’, indicating a strong consensus on the significance of self-sufficiency
in the defence sector.

(b) Promotion of New Players. The survey results show that 93.2% of
respondents believe that the initiatives have successfully encouraged new
private players, MSMEs, and startups to contribute significantly to the
indigenous defence industry, highlighting the positive impact of these initiatives
on fostering innovation and participation from diverse players.

(c) Contribution to Indigenous Defence Production. A significant

91.2% of respondents believe that the 'Atmanirbhar Bharat' initiative has
enhanced India's indigenous defence production, with nearly half (48.3%)
 60

considering this contribution to be significant, showcasing a broad consensus

on the positive influence of these initiatives on boosting indigenous defence
capabilities.

(d) Changes in Indigenous Defence Equipment. Respondents have

observed changes in the availability and production of indigenous defence
equipment since the implementation of the 'Make in India' initiative, with varying
perceptions on the extent of increase, indicating ongoing progress in this area.

(e) Reduction in Foreign Dependency. The survey reflects that a

majority of respondents (70.4%) believe that 'Atmanirbhar Bharat' and 'Make in
India' initiatives have reduced India's dependency on foreign defence imports,
underlining progress towards enhancing self-reliance in defence production.

(f) Effectiveness of Policies and Incentives. The majority (60.5%)

find the policies and incentives introduced under these initiatives effective in
promoting indigenous defence production, emphasizing the importance of
supportive policies and incentives for industry growth.

(g) Encouragement of Innovation. A high percentage (92.5%) agree

that these initiatives have encouraged innovation and technological
advancements in India's defence sector, highlighting the positive impact on
fostering creativity and advancement within the industry.

(h) Challenges in Achieving Self-Reliance. Respondents identified

various challenges hindering self-reliance, including technological gaps
(25.9%), budget constraints (16.3%), poor policies (6.8%), and shortage of
skilled manpower (3.4%), emphasizing the need to address these obstacles for
sustained growth.

(j) Addressing Bureaucracy and Red-Tapism. While 55.1% believe

challenges like bureaucracy have been effectively addressed, 44.9% remain
neutral or disagree, indicating a need for further improvements to streamline
processes and ensure transparency in defence procurement.
 61

(k) Impact on Indigenous Defence Production. The overwhelming

majority (90.5%) perceive a positive impact from these initiatives on India's
indigenous defence production, with a significant proportion rating it as
moderately or highly positive, underscoring the overall success and
effectiveness of these initiatives.

(l) Focus Areas for Enhancement. Respondents prioritize technological

& skill development as well as infrastructure improvement to further enhance
indigenous defence production, signaling a need for continued focus on
technology development and infrastructure enhancement to support
indigenization efforts effectively.

94. Overall, the survey provides valuable insights into the critical role of a robust
domestic defence industry for India and the challenges and opportunities that lie ahead
in achieving self-reliance. By addressing these challenges and implementing effective
strategies, India can ensure its national security and strategic autonomy in the face of
future threats.

Validation of Hypothesis

95. This dissertation examines the impact of ‘Atmanirbhar Bharat’ and ‘Make in
India’ initiatives to include how these initiatives have brought about a significant
change in India’s indigenous defence production, thereby reducing imports, promoting
manufacturing of defence equipment within the country and also export military
equipment to other countries around the world.

96. The recent wars have illustrated how territorial disputes, historical tensions, and
strategic interests can blend into a protracted and unpredictable conflict, demanding
not only military might but also the resilience of domestic industries to support the
prosecution of war.

97. The survey reveals a strong consensus that the need for self-reliance and
resilience in domestic industries is vital for development of the economy, projection of
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power in the world forum, national preparedness during adversities and also to reduce
the country’s dependence on foreign imports. Therefore, prioritizing self-reliance in
defence production should currently be a top government priority, especially
considering the presence of two hostile neighbours.

98. Validation. The hypothesis of the dissertation therefore, stands validated.

‘‘Atmanirbhar Bharat’ and ‘Make in India’ initiatives have significantly boosted India’s
indigenous defence production, though the contrasting results would require few years
to show their significance.
 63

CONCLUSION AND RECOMMENDATIONS

99. The Indian defence manufacturing industry is vital not only for security of India
but also for its economy. The demand for better equipment, based on advanced
technology, is increasing as India moves towards modernising its forces. Such
demands are also increasing in other countries, which are facing threats from bullying
countries that still believe in achieving their objectives using force. India’s threat
perception of a two-front-war has risen many times in recent years. The security of the
land border and the Indian Ocean demands more submarines, aircraft carriers, fifth-
generation fighter aircraft, combat helicopters, and super-sonic missiles.

100. The fundamental shifts in strategic equations globally demand a robust defence
capability to maintain India’s strategic autonomy. The risks involved in importing
defence equipment are well known. Usually, the best technology-based weapon
systems are not transferred and if they are, the importing country remains dependent
for maintenance on the country manufacturing the system. Defence equipment
imported from abroad is susceptible to espionage and sensitive information can be
leaked/stolen through such imported systems. Domestically manufactured equipment
reduces this vulnerability. In addition, the purchase from foreign countries usually
takes a lot of time, and by the time the equipment comes, it has outdated technology.

101. India has done well recently to push its defence manufacturing capabilities. The
creation of two defence corridors will evolve as hubs for the defence manufacturing
industry along with private industries linked to the defence industries, skilled
manpower, start-ups, and R&D institutions providing useful assistance. Defence
indigenisation has been extended to areas such as Innovations for Defence
Excellence, which seeks to generate innovation in aerospace and defence. Indian
Defence Minister, Shri Rajnath Singh, has recently stated that it will establish the role
of the private industry as a partner beyond just a vendor or supplier. The positive list
is yet another excellent decision that will go a long way towards ensuring a market for
the indigenous defence industry. The fifth-generation fighter plane is likely to be
manufactured in about three-and-a-half years while transport aircraft would start
production by 2026.
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102. The exports have substantially increased, indicating bright prospects for the
Indian defence industry. To attract investments, incentives are being given. However,
there would be key challenges in achieving the goals. First, investors’ interests will
have to be protected to ensure their continued support to the defence industry. The
long-term challenge for India is to ensure deep and sustained investments in defence
R&D. Increase in exports of indigenous weapons constitute an essential aspect for
attracting investments. The government’s decision to deploy defence attachés in the
target counties is an excellent proposal, but they will require the whole of government
support, including diplomatic missions and intelligence agencies to achieve the
objective. Second, the start-ups and private players will need to be given sufficient
assistance and assurance.

103. Lastly, the production will have to be accelerated to ensure timely delivery. At
present, some parts are imported for our products. India needs to have a defence
industrial ecosystem that can meet the requirements of the Indian Armed Forces.
These demand a greater push in the direction of Atmanirbharta, particularly when the
security environment is deteriorating, causing not only security challenges but also
economic problems.
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 66

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id=2470