India's Defence Ecosystem: Unlocking Private Sector Potential

The Defence Ecosystem's Hidden Potential

India's Make in India campaign, launched in 2014, aimed to transform the country from a major arms importer to a global producer and exporter. While progress has been made, the private sector's potential remains largely untapped. This analysis delves into the critical factors that will unlock the sector's true potential.

A Decade of Progress, Yet Challenges Remain

Since 2015, India has made significant strides in defence manufacturing, with private players delivering notable results in artillery, shipbuilding, UAVs, and radars. However, a decade should yield transformative results, as seen globally. Israel's layered air and missile defence system, South Korea's KF-21 fighter, and Turkiye's KAAN fifth-generation fighter are just a few examples of countries that have achieved rapid progress.

Key statistics:

• India imported over 60% of its defence needs in 2015.
• Private firms contributed less than 15% to production.

Empowering the Private Sector

For the private sector to lead India's defence transformation, sustained investment in research and development (R&D) is critical. Companies like L&T, Bharat Forge, and Tata Power SED must scale up R&D to create next-generation platforms and subsystems, ensuring global competitiveness. The government can support this by offering R&D tax incentives, co-funding high-risk projects, and establishing innovation hubs where industry, academia, and start-ups collaborate.

Opportunities for Collaboration

Reforms have laid a strong foundation. The SP model holds potential for major contracts in fighters, submarines, and helicopters. Defence corridors provide land and partnerships for MSMEs. Over 200 iDEX contracts have spurred innovation, with pathways to production. Indigenisation lists, covering 500+ items since 2020, focus on spares and subsystems, paving the way for advanced technologies like rad-hard chips, seekers, and turbines.

The Path Forward

Since 2015, reforms have fostered awareness and private innovation. Continued focus on streamlined procurement, predictable demand, and R&D support will reduce import reliance. By empowering large private players to invest in R&D, alongside start-ups and SMEs, India can build a resilient defence ecosystem, turning vision into reality.

The Bottom Line

India's defence ecosystem is on the cusp of transformation. Unlocking the private sector's potential requires sustained investment in R&D, streamlined procurement, and predictable demand. By working together, India can achieve self-reliance and become a major player in the global defence market.