Defence Industrial Base

Building a strong Defence Industrial Base is India’s strategic imperative in the current geopolitical scenario. Read here to learn more.

India’s ambition to achieve ₹3 lakh crore in defence production and ₹50,000 crore in defence exports by 2029 marks a decisive shift in its national security and economic strategy.

Amid intensifying geopolitical instability, supply-chain disruptions, and technological warfare, the debate on building a robust defence industrial base (DIB) has gained urgency.

No longer merely an industrial goal, defence indigenisation has become central to strategic autonomy, operational readiness, and India’s vision of Viksit Bharat 2047.

Table of Contents

What is a Defence Industrial Base?

A defence industrial base refers to the entire ecosystem, public sector units, private firms, MSMEs, startups, R&D institutions, testing and certification infrastructure, skilled manpower, and logistics networks, that can design, develop, manufacture, maintain, upgrade, and export defence systems.

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A strong DIB ensures that a nation can sustain its military capabilities independently during peace, crisis, and war, without excessive reliance on foreign suppliers.

Current Status of India’s Defence Industrial Base

India’s defence manufacturing ecosystem has expanded significantly over the past decade:

Defence production reached a record ₹1.54 lakh crore in FY 2024-25
Indigenous production stood at ₹1.27 lakh crore, a 174% rise since 2014-15
Defence exports touched ₹23,622 crore, reaching over 80-100 countries
Over 16,000 MSMEs and 462 licensed companies form the backbone of supply chains
The private sector’s share has risen to nearly 23%

These figures signal a structural shift from import dependence to domestic-led capability building.

Why India Needs a Strong Indigenous Defence Industrial Base

Strategic Autonomy and National Security: Dependence on foreign defence suppliers exposes India to:

Export controls
Sanctions
Geopolitical pressure
Wartime supply disruptions

An indigenous base ensures the uninterrupted availability of weapons, spares, and ammunition during crises.

Example: The BrahMos missile system, co-developed and manufactured in India, guarantees full operational control without foreign “push-button vetoes”.

Operational Readiness and Wartime Sustainment: Domestic manufacturing allows:

Faster repairs and upgrades
Customisation for terrain and climate
Reduced turnaround time during conflicts

Example: During the Ladakh standoff, indigenous platforms like LCA Tejas and ALH Dhruv were rapidly adapted for high-altitude operations by HAL, avoiding delays from foreign dependence.

Economic Multiplier and High-Skill Employment: Defence manufacturing drives innovation in:

Aerospace
Electronics and semiconductors
AI, robotics, and cyber systems
Advanced materials and metallurgy

It creates high-skilled employment and long-term industrial capacity.

Example: The Tamil Nadu and Uttar Pradesh Defence Industrial Corridors have attracted firms like Tata Advanced Systems and L&T, creating integrated supply chains.

Geopolitical Influence through Defence Exports: Defence exports strengthen:

Strategic partnerships
Military interoperability
Diplomatic leverage

Example: India’s BrahMos export to the Philippines (2024) positioned India as a net security provider in the Indo-Pacific, reinforcing its regional influence.

Government Initiatives to Build the Defence Industrial Base

India has undertaken wide-ranging reforms:

Defence Acquisition Procedure (DAP) 2020 prioritising Buy (Indian-IDDM)
Corporatisation of Ordnance Factories for efficiency and accountability
FDI liberalisation (74% automatic route, 100% via government route)
Innovation platforms: iDEX, Technology Development Fund (TDF), RDI ecosystem
Defence Industrial Corridors in UP and Tamil Nadu
Export facilitation reforms: Online authorisations, OGEL, simplified SOPs

These measures aim to shift India from a buyer to a designer and exporter of defence systems.

Key Challenges in Defence Indigenisation

Regulatory Complexity: Multiple approvals for Joint ventures, Technology transfer, and Export licensing slow execution and discourage private investment.

Example: The Single-Engine Fighter Jet project faced prolonged delays under the Strategic Partnership model due to unclear technology ownership norms.

Testing and Certification Bottlenecks: Lengthy trials, limited test infrastructure, and frequently changing GSQRs delay induction.

Example: The ATAGS artillery system underwent nearly six years of trials, slowing deployment despite successful performance.

Financing Constraints for MSMEs: Defence MSMEs face Long order cycles, Delayed payments, and High working-capital requirements. Banks hesitate to lend without firm MoD contracts.
R&D-to-Production Gap: India excels in R&D but struggles to scale prototypes into mass production.

Example: The Nishant UAV, despite DRDO‘s success, faced production and reliability challenges.

Demand Uncertainty: Frequent tender cancellations and re-tendering discourage long-term investment.

Example: Repeated halts in the Navy’s LPD project affected planning by private shipyards like L&T.

Way Forward

Predictable Long-Term Procurement Pipelines: 10-15 year procurement roadmaps can reduce investment risk and enable capacity expansion.
Single-Window Export Facilitation Agency: A unified authority can fast-track licensing, coordination, and after-sales support, enhancing India’s credibility as a supplier.
Reorient DRDO’s Role: DRDO should focus on frontier research, while industry leads manufacturing and commercialisation.
Strengthen Defence Finance Ecosystem: Specialised credit guarantees, export finance, and sovereign-backed funding can support MSMEs.
World-Class Testing Infrastructure: Integrated testing facilities aligned with global standards will reduce induction time and improve export acceptance.
Ease of Doing Business for MSMEs: Time-bound payments, simplified compliance, and faster clearances are essential for startup survival.

Conclusion

A strong defence industrial base is both India’s shield and springboard, protecting sovereignty while powering innovation-led growth.

India’s recent gains in production and exports demonstrate progress, but sustaining momentum requires deeper reforms in financing, testing, procurement certainty, and governance.

If pursued consistently, Atmanirbharta in defence can emerge as a defining pillar of Viksit Bharat 2047, transforming India from a defence importer into a globally credible strategic power.

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