The Hon’ble Prime Minister of India, Shri Narendra Modi, unveiled the "Make in India” policy in 2014 and included defence manufacturing as an integral part of the 'Aatmanirbhar Bharat Abhiyan.' Since then, India has grown into one of the world's most powerful countries with the third highest military spending and the second largest armed force.

Indian defence sector witnessed one of the most important milestones on September 02, 2022. Prime Minister commissioned the country’s first indigenous aircraft carrier INS Vikrant, with 76 per cent indigenous content, in Kochi. Prime Minister also unveiled the new Naval Ensign (Nishaan) and mentioned Vikrant as a unique reflection of India becoming self-reliant.

Aatmanirbharta, self-reliance in defence manufacturing and services is imperative for India’s strategic autonomy. The process required a multifaceted approach including strengthening domestic production, reducing imports, R&D and capital investment.

Over the past 8 years, the Government of India has brought in reforms to encourage a robust defence industrial ecosystem with dynamism in domestic design, development, and manufacturing of defence equipment. The Aatmanirbhar plan included simplification of the industrial licensing process, the launch of the Innovations for Defence Excellence (iDEX) scheme, an indigenisation portal named SRIJAN, MSMEs promotion, and the setting up of industrial corridors. 

Starting with the capital outlay of the Defence Services sector, total allocation increased about 76 per cent over a period of nine years. Moreover, the cumulative increase in the Capital Budget from 2019-20 has been INR 48,975 crore (about 47.37 per cent). GoI has also released three ‘Positive Indigenisation Lists’ of sub-systems/ assemblies/ sub-assemblies/ components. The lists were notified in three phases, the first of 101 items on August 21, 2020, 1, 2020, the second of 108 items on May 31, 2021, and the third of 101 items on April 7, 2022.

The share of domestic capital procurement is increasing on a year-on-year basis, from 58 per cent and 64 per cent in 2020-21 and 2021-22, respectively, to 68 per cent of the capital acquisition Budget of the Defence Services for the year 2022-23. Raksha Mantri Shri Rajnath Singh recently highlighted that the budget allocations are in line with Prime Minister Shri Narendra Modi’s vision of ‘Vocal for Local.’  As domestic procurement has increased, capital procurements from foreign vendors have fallen significantly from 48 per cent in 2018-19 to 34 per cent in 2020-21. 

The Ministry of Defence presented the Defence Production and Export Promotion Policy 2020, which envisaged a turnover of INR 1,75,000 Crores, including export of INR 35,000 Crores in Aerospace and Defence goods and services by 2025. The size of the Defence Industry, including the Aerospace and Naval Shipbuilding Industry, was reported at INR 84,643 Cr in 2020-21. 

The government has also allowed up to 74 per cent FDI under the automatic route, and up to 100 per cent through the Government route to boost investments in the sector. Following Prime Minister Narendra Modi’s vision for ‘development and pro-people reforms,’ India’s defence sector is headed for better days. As India’s journey for self-reliance in defence unfolds, it will serve as a useful model for other countries that are looking to become self-reliant as well.

This blog has been authored by Khushi Jain and Bhavya Tyagi.

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