Editorial 2: The significance of a strong defence industrial base

Context

In a changing global security environment, India’s security and economic ambitions demand decisive action.

Introduction

India’s ambition to emerge as a developed nation by 2047 depends not only on social and economic transformation but also on the robustness of its strategic capabilities. A central pillar of this framework is the defence industrial base. For decades, India’s defence manufacturing ecosystem was shaped by restrictive policies that curtailed private sector participation and fostered an overdependence on imports. Ironically, while domestic private industry was largely excluded, imports from foreign private manufacturers were freely permitted. This policy imbalance created a structural vulnerability, undermining both economic growth and national security.

A shift after reforms

• Policy reforms have opened the defence sector to private participation, eased FDI norms, and enabled the corporatisation of the Ordnance Factory Board
• Expansion of procurement under the ‘Make’ procedure and active promotion of innovation have accelerated sectoral growth
• Defence production has risen steadily, while exports have expanded exponentially to over 80 countries
• These trends reflect a maturing defence ecosystem capable of meeting domestic needs and integrating into global supply chains
• Ongoing conflicts in Europe, West Asia, and Asia highlight the risks of supply-chain disruptions, underscoring the value of domestic defence resilience
• For India, facing border and maritime challenges, self-reliance in defence has become indispensable, not optional
• Geopolitical shifts, increased European defence spending, and demand for cost-effective platforms create new export opportunities
• India’s strategic location in the Indian Ocean Region and growing diplomatic footprint strengthen its prospects as a credible global defence supplier

Simplify procedures

• Realising India’s defence export potential requires sustained reform momentum
• Regulatory complexities continue to constrain private sector participation, particularly for MSMEs and startups
• Export licensing, joint ventures, and technology-transfer approvals need faster and clearer processes
• Long-term demand projections are essential to build investor confidence and enable large private investments
• Achieving the target of ₹50,000 crore in defence exports by 2029 hinges on simplified procedures and policy continuity
• The DRDO’s role must evolve: focus on frontier research, while production, scaling, and commercialisationshift to industry
• Such role clarity reflects global best practices and enhances competitiveness
• A dedicated defence export facilitation agency, staffed with professionals, can provide a single-window interface for global partners
• This would address inter-ministerial coordination gaps and improve overall export outreach efficiency

Key steps to take

• Financial, testing, and certification frameworks require comprehensive reform to support defence manufacturing
• Indian firms face constraints from limited access to competitive credit, overly stringent domestic standards, and delayed trial processes
• Specialised export financing instruments can ease capital constraints and improve market access
• Expanding integrated testing facilities will reduce delays and lower compliance costs
• Adopting international certification protocols will enhance global acceptability and competitiveness
• Greater use of lines of credit, government-to-government agreements, and long-term service commitments can strengthen buyer confidence
• Defence exports reflect technological maturity and strategic reliability, not just commercial success
• A stronger defence industrial base reduces import dependence, creates high-skilled employment, and enhances geopolitical leverage

Conclusion

The progress achieved in recent years is encouraging, but the moment now calls for sustained and consistent efforts to deepen reforms and build an ecosystem that actively promotes innovation and investment. India’s security imperatives and economic aspirations demand nothing less. Strengthening the defence industrial base is therefore not merely a strategic requirement; it is a defining stride in India’s journey towards becoming a confident, capable, and influential global power.