Experts Explain | Make in India in defence sector: Challenges, bottlenecks, and the way forward

In the immediate post-Independence period, India was initially reliant on military equipment imports from the United Kingdom and then increasingly from the Soviet Union (USSR). Over time, the United States and even Israel have emerged as major suppliers of defence equipment to India.

China, too, began its defence industrial journey with technical assistance from the Soviet Union. However, from around 1961 onwards, China’s industrial development and defence production have been based mostly on indigenous efforts. And, although India and China started from somewhat comparable domestic technological backgrounds in the 1950s, China has currently achieved a significantly higher level of sophistication in domestic defence manufacturing.

Although India has developed the ability to procure and assemble several defence platforms, it finds it difficult to manufacture, e.g. jet engines as well as highly sophisticated drones.

How does a defence purchase or manufacturing project typically move through the system, and where are the biggest bottlenecks?

India’s defence acquisition process is over-centralised and layered. The process begins with the armed forces identifying requirements through Quantitative Requirements (QRs) — namely, the technical and operational specifications for the equipment to be procured.

However, defence procurement from both domestic and foreign sources has long been characterised by delays, with some projects stretching over decades. For example, the 2022-23 Ministry of Defence Parliamentary Standing Committee observed, “Of 178 projects, the original time tables were not adhered to in 119 cases. For 49 projects, the additional time taken was more than the original time allotted and overall delays ranged between 16 per cent and 500 per cent beyond the agreed deadlines.”

The delays are caused by significant bottlenecks in the system. For example, the relatively ambiguous nature of the QRs themselves. Further, several official-level layers create procedural delays through overlapping approvals and prolonged decision-making.

Next, inadequate engineering and technical talent within government-owned institutions is partly due to relatively low compensation structures, which are at times inadequate to attract the best talent even within the country.

To the extent that defence production needs to be necessarily in the public sector, for confidentiality or other reasons, the pay and allowances of top government scientists and engineers should be comparable to their counterparts in the developed West. That would help foster and retain the best scientific and engineering talent.

What lessons does India need to draw from recent global conflicts, including those in Gaza, Lebanon, and Iran?

The central lesson for India is the need to build a strong and self-reliant defence ecosystem, reducing dependence on foreign military equipment suppliers and developing advanced indigenous technological capabilities, since there could be supply-chain disruptions due to uncertainties in international partnerships.

Recent conflicts also highlight the changing nature of warfare, where military advantage depends not only on high-end conventional platforms but also on scalable, cost-effective technologies such as drones, missiles, and air defence systems.

The wars in Ukraine and West Asia have demonstrated how relatively inexpensive unmanned aerial vehicles (UAVs) can inflict significant damage on military assets and critical infrastructure.

Historically, warfare has relied heavily on technologically sophisticated and expensive systems such as aircraft carriers, highly expensive fighter jets, bombers and cruise missiles. However, relatively low-cost drones have emerged as an increasingly important strategic and retaliatory tool. In both Ukraine’s defence against Russia and Iran’s regional military strategy, UAVs have played an important role in impacting battlefield outcomes.

For instance, it is estimated that during the first week of Tehran’s retaliatory actions, drones accounted for 71% of the strikes on US military establishments in Gulf Cooperation Council (GCC) states.

For India, this means not only strengthening domestic production capacity in traditional defence sectors but also investing in emerging technologies such as UAVs, autonomous systems, and advanced air defence capabilities to ensure strategic preparedness.

Where does private sector involvement stand today?

India has taken several important steps in recent years to widen and deepen private sector participation in defence manufacturing and thus gradually reduce dependence on imports.

A key initiative was the introduction of the Strategic Partnership (SP) model, designed to facilitate collaboration between Indian private firms and foreign Original Equipment Manufacturers (OEMs) in the production of major defence platforms such as submarines, helicopters, and fighter aircraft.

Another significant reform has been the liberalisation of foreign direct investment (FDI) in defence, with the cap increasing from 24-49% in 2016 and further to 74% under the automatic route in 2020. This has made it more feasible for foreign firms to form joint ventures with Indian companies, thus perhaps facilitating technology transfer and helping build domestic industrial capacity.

Despite these reforms, Defence Public Sector Undertakings (DPSUs) account for over 70% of total defence manufacturing.

Private firms continue to face significant barriers, including preferential treatment for DPSUs, more onerous documentation requirements, often delayed payments, and limited representation in procurement decision-making.

A more balanced defence manufacturing ecosystem would require a genuine level playing field between public and private actors. The government’s role should increasingly be that of a strategic buyer.

India does not need to choose between public and private manufacturing. International experience offers contrasting models: defence production in countries such as China and Russia remains predominantly state-led, while in the United States, the government sets priorities and funds innovation, but manufacturing is largely undertaken by private firms.

For India, the priority should be to create a hybrid ecosystem in which both the Indian public and private sector companies compete on fair terms and collaborate.