India's Defence Sector: Key Developments

India's Defence Sector: Key Developments

India remains the fourth-largest global defense spender in 2023, trailing only the U.S. in military expenditure. This shift reflects a deliberate strategy of increasing capital outlay, with a post-pandemic focus on reducing foreign military imports while simultaneously increasing domestic defense exports. From self-reliance in defense manufacturing to rising international exports, India’s evolving defense landscape signals a clear path toward modernization and strategic autonomy.

Key Developments in India’s Defense Modernization
Boosting Indigenous Manufacturing:
India is moving toward defense self-reliance by ramping up indigenous production. Policies like the Defence Acquisition Procedure (DAP)-2020 prioritize domestic procurement, fostering growth. In 2023-24, India’s domestic defense production reached ₹1.27 lakh crore, marking a 16.7% growth from the previous year. Notably, 75% of the 2024-25 defense budget’s capital procurement is reserved for indigenously developed systems.

Surge in Defense Exports:
India is increasingly becoming a prominent defense exporter. Weapons like BrahMos missiles and Pinaka rocket systems are gaining international traction. Defense exports in FY 2023-24 soared to ₹21,083 crore, showing a remarkable 31-fold increase from a decade ago. With an ambitious target of ₹35,000 crore by 2025, initiatives like the iDEX scheme are crucial for scaling up export capacities.

Strategic Global Partnerships:
India has formed strategic defense alliances with leading global powers to fill technological gaps. Collaborations such as the Mazagon Dock- Thyssenkrupp Marine Systems partnership for Project P-75(I) submarines, and the US-India INDUS-X initiative for AI and hypersonic technologies, exemplify India’s approach. In 2023, India and France also agreed to jointly produce aerospace engines, advancing indigenous capabilities.

Missile Systems and Tactical Advancements:
India has made significant strides in missile technology, contributing to its strategic autonomy. The successful induction of the Pralay tactical missile, alongside trials of the Agni Prime missile, which enhances long-range strike precision, underscore India's growing deterrence capability.

Defense Industrial Corridors for Growth:
India is establishing dedicated Defense Industrial Corridors in Tamil Nadu and Uttar Pradesh, aiming to attract ₹20,000 crore in investments. These corridors are critical to regional development, with Tamil Nadu alone securing ₹11,794 crore in 2024 commitments, promoting defense innovation across the nation.

Focus on Cyber and Space Defense:
Recognizing emerging threats, India is enhancing its space and cybersecurity capabilities. The establishment of the Defense Space Agency and planned satellite deployment for surveillance reflect India's growing focus on non-traditional security domains. Cybersecurity initiatives by CERT-In aim to safeguard defense networks from external threats.

Indigenization through Positive Lists:
India has introduced Positive Indigenization Lists, which restrict the import of specified defense items after set deadlines. This has fostered innovation and significantly reduced reliance on foreign suppliers. Technologies like K9 Vajra artillery systems and LCA Tejas components are examples of successful indigenization.

Strengthening Naval and Maritime Security:
India is enhancing its naval power to secure maritime interests, particularly in the Indo-Pacific region. The induction of INS Vikrant, India’s first indigenous aircraft carrier, and the deployment of Sumedha-class vessels for anti-piracy operations reflect India’s commitment to strengthening its maritime defense capabilities.

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Challenges Facing India’s Defense 

Sector Reliance on Imports:
India remains one of the largest global arms importers, threatening its defense autonomy. Despite reducing foreign imports since FY22, India continues to rely heavily on external suppliers, such as for the S-400 missile system from Russia. The ongoing Russia-Ukraine conflict has exposed vulnerabilities in supply chains for critical defense systems.

Delays in Procurement:
India’s defense procurement process is plagued by bureaucratic delays, affecting timely acquisition of advanced weaponry. Long delays in projects like the Tejas Light Combat Aircraft (LCA) and the Project P-75(I) submarine acquisition illustrate systemic inefficiencies.

Aging Equipment:
A large portion of India’s defense inventory is outdated, which hampers combat readiness. The Indian Army's T-72 tanks and Bofors howitzers, both over four decades old, remain in service despite more modern alternatives being available.

Limited Indigenous Manufacturing Capacity:
Despite significant efforts to boost indigenous defense production, India’s manufacturing ecosystem remains underdeveloped, especially for critical technologies such as engines and avionics. For instance, India’s reliance on General Electric for jet engines for the Tejas remains a gap in self-reliance.

Inadequate Defense Budget Allocation:
While India’s defense budget is growing, it still disproportionately favors revenue expenditure, leaving insufficient funds for modernization. A large portion is spent on salaries and pensions, which limits investment in upgrading defense technology and infrastructure.

Cybersecurity Threats:
India’s growing reliance on digital systems makes it vulnerable to cyber-attacks. Past incidents, like the breach of DRDO's systems in 2013, highlight gaps in cybersecurity preparedness. India’s defense networks remain at risk from global cyber adversaries.

Absence of Joint Command Structure:
Despite the creation of the Chief of Defence Staff (CDS) in 2020, India's armed forces still lack a unified command structure. The absence of joint theater commands affects coordination and operational efficiency, as seen during the 2020 Galwan Valley standoff.

Limited R&D Investment:
India’s defense R&D spending remains significantly lower than global standards. Delays in key projects, like the Arjun tank and Kaveri jet engine, illustrate India’s dependence on foreign technology. Increasing R&D investment is vital to overcoming these challenges.

Shortage of Skilled Workforce:
India faces a shortage of skilled personnel in critical defense sectors, particularly in robotics, AI, and advanced manufacturing. Despite the Skill India initiative, the defense sector remains underserved, hindering growth in advanced technologies.

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Measures for Enhancing Defense Modernization
Streamlining Procurement:
India should revamp the defense procurement process to reduce delays and increase efficiency. Simplifying acquisition procedures and implementing AI-based systems for procurement can speed up decision-making and transparency.

Increasing Capital Expenditure:
A larger share of the defense budget should be allocated to modernization to address capability gaps. This will enable faster induction of systems like the LCA Tejas Mark II and S-400 missile systems.

Integrating Schemes for Indigenous Production:
Linking schemes like Make in India and the Production Linked Incentive (PLI) program will foster domestic manufacturing of critical technologies. Private sector involvement in R&D and production can reduce dependence on foreign suppliers.

Strengthening Global Collaborations:
India should deepen its defense collaborations with technologically advanced nations to co-develop cutting-edge defense platforms. Partnerships like the India-US INDUS-X initiative are key to acquiring technologies like AI and hypersonics.

Building Cyber and Space Defense:
India must enhance its capabilities in space and cyber defense to counter growing non-traditional security threats. Strengthening the CERT-In framework and partnering with global leaders in space warfare can address emerging vulnerabilities.

Establishing Joint Theater Commands:
The rapid establishment of joint theater commands is critical for improving coordination between the Army, Navy, and Air Force. This will enable faster, more coordinated responses to regional threats, especially in the context of China and Pakistan.

Encouraging Innovation through Startups and MSMEs:
Expanding initiatives like iDEX will bring innovative defense solutions from startups and MSMEs. By collaborating with Defense Industrial Corridors, India can nurture a robust domestic defense manufacturing ecosystem.

Prioritizing Naval Modernization:
India must prioritize the modernization of its navy to secure maritime interests in the Indo-Pacific. The induction of platforms like INS Vikrant and the development of Project 75(I) submarines are essential for maintaining regional maritime dominance.

Focusing on Skill Development:
India needs to invest in a specialized workforce for the defense sector, ensuring skilled labor in areas like robotics, AI, and advanced manufacturing. Collaborating with training initiatives in the Defense Industrial Corridors will help bridge this gap.

Promoting R&D for Self-Reliance:
Increasing defense R&D spending to at least 5% of the budget will help drive innovation. Private-public collaborations can further accelerate the development of critical technologies like jet engines and hypersonic missiles.

Investing in Green Technologies:
India should integrate sustainable practices in defense operations, such as developing electric-powered vehicles and energy-efficient bases. Green technology can reduce operational costs and align with global sustainability goals.

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Key Takeaways
India’s defense sector has made significant progress toward self-reliance and modernization, with advances in indigenous production, rising exports, and technological breakthroughs. However, challenges such as procurement delays, outdated equipment, and limited R&D investment persist. By focusing on innovation, strengthening global partnerships, and improving defense infrastructure, India can enhance its defense capabilities and ensure national security in an evolving global landscape.

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