India’s Defence Industry Strides Toward Self-Reliance, Boosting Indigenous Manufacturing and Job Creation

Mumbai, India – The Indian defence industry has made remarkable progress in achieving complete self-reliance in the manufacturing of defence equipment necessary for the country’s armed forces, leading to less reliance on imported goods. Various measures have been taken in the recent past by the Indian government to enhance defence equipment producing goods, development, and creation. These programs aim to make Indian defence manufacturing self-reliant.

Under the Defence Acquisition Procedure (DAP) 2020, 411 service items and 3 positive indigenization lists of 3,738 items from the Defence Public Sector Undertakings (DPSUs) will be embargoed on imports beyond specified timelines. The initiative also simplifies industrial licensing with longer validity periods, liberalizes foreign direct investment (FDI) policies, and launches the Mission DefSpace and Innovations for Defence Excellence (iDEX) scheme for start-ups and micro, small and medium enterprises (MSMEs). The Public Procurement (Preference to ‘Make in India’) Order, 2017, and the SRIJAN indigenization portal help Indian industries, notably MSMEs, indigenize.

Certain measures have helped develop defence industry MSMEs, creating many new jobs. The ‘Aatmanirbhar Bharat’ initiative has promoted indigenous defence equipment production and design, reducing foreign defence imports from 46 percent to 36.7 percent of overall expenditure as of December 2022. In FY 2019-2020, defence production totaled INR 79,071 crore. In 2020-2121 and 2021-2022, values rose to INR 84,643 crore and INR 94,845 crore.

Indian defence exports have increased eightfold since 2016–2017, and currently the value has increased to INR 13,800 crore. The Indian defence establishment launched Innovations for Defence Excellence (iDEX) in April 2018 to promote technology development and innovation in the defence and aerospace industries and engage MSMEs, startups, individual innovators, R&D institutes, and academia in R&D that could be used for Indian defence and aerospace needs. iDEX currently supports 233 programs, 310 companies, and 140 contracts with grants, funds, and other assistance.

iDEX Prime, launched recently, provides businesses with up to INR 10 crore in grants to develop high-end products. 366 defence businesses acquired 595 industrial licenses as of October 2022. Between 2019-2020 and September 2022, the government authorized 163 capital procurement proposals for domestic manufacturing totaling INR 246,989.38 crore. Over the previous four years, domestic defence procurement has increased from 54 percent to 68 percent, with 25 percent of the budget going to private enterprise. The Government’s focus on domestic defence manufacturing and self-sufficiency has reduced international defence purchases from 46 percent to 36 percent over the past four years.

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