By reading this article you can solve the below UPSC Mains Model Question
A strong defence industrial base is a prerequisite for strategic autonomy, military preparedness and economic resilience. In this context, examine the significance of a robust defence industrial base for India. What policy measures have been taken in recent years to strengthen indigenous defence manufacturing, and what challenges still remain? (GS 3 – Internal Security)
1. Introduction: Defining the DIB
The Defence Industrial Base refers to the collective capacity of a nation’s public and private sectors to design, develop, manufacture, and maintain military equipment. As per the MoSPI 2025 Report, India’s defence production reached a record ₹1.54 lakh crore in FY 2024-25, marking a 16.7% growth.
2. Strategic Significance
- Strategic Autonomy: Reducing the 9.8% share of global arms imports (where India is the largest importer) ensures that foreign policy isn’t compromised by “Sanctions” or “Supply Chain disruptions” during conflicts (e.g., the Russia-Ukraine impact).
- National Security: Enables a “Lifecycle Support” system where equipment can be upgraded and repaired domestically, avoiding dependency on original equipment manufacturers (OEMs) during war.
- Economic Multiplier: The sector involves over 16,000 MSMEs. A strong DIB drives the “Make in India” initiative, creating high-skill jobs and boosting the manufacturing GDP.
- Export as Diplomacy: Defence exports reached ₹23,622 crore (2024-25). Exporting platforms like BrahMos and Tejas to friendly foreign countries (FFCs) strengthens India’s role as a “Net Security Provider” in the Indo-Pacific.
a) Government Framework & Initiatives:
1. Defence Acquisition Procedure (DAP) 2020
- Buy (Indian-IDDM): The highest priority category. It stands for Indigenously Designed, Developed, and Manufactured.
- Make-I and Make-II: Encourages private sector participation in prototype development.
- Latest 2024-25 Amendment: Streamlined the “Acceptance of Necessity” (AoN) process to ensure that the time taken from tender to contract is reduced by 30-40%.
2. Defence Procurement Manual (DPM) 2025
- Digital Integration: Mandates the use of the GeM (Government e-Marketplace) for all recurring defense needs.
- MSME Facilitation: Provides relaxations in “Prior Experience” and “Prior Turnover” criteria to help startups compete for maintenance contracts.
3. Positive Indigenisation Lists (PILs)
- Mechanism: These lists place a ban on the import of specific items (e.g., specific sensors, artillery components, and naval systems) after a set deadline.
- Impact: Over 5,000 items have been earmarked for domestic production, creating a guaranteed market for Indian manufacturers.
b) Key Operational Initiatives:
1. Innovations for Defence Excellence (iDEX)
- SPRINT Challenges: A collaborative project (specifically with the Navy) to induct 75+ indigenous technologies.
- iDEX Prime: Provides grants up to ₹10crore to startups for developing high-end technology.
2. Defence Industrial Corridors (DICs)
- Uttar Pradesh DIC: Focuses on nodes like Agra, Aligarh, and Kanpur (Aerospace and Land systems).
- Tamil Nadu DIC: Focuses on Chennai, Coimbatore, and Hosur (Missiles and Naval systems).
- Current Status: As of late 2025, these corridors have attracted cumulative investments exceeding ₹12,000crore.
3. Strategic Partnership (SP) Model
- Target Areas: Fighter aircraft, Helicopters, Submarines, and Armoured Fighting Vehicles.
- Goal: To move away from “Licensed Production” toward “Technology Transfer” and “Joint Ownership.”
c) Fiscal and Administrative Support
- FDI Reforms: FDI limit is 74% via Automatic Route and up to 100% via Government Route for cases resulting in access to modern technology.
- Dedicated R&D Budget: In the 2025-26 Budget, 25% of the Defence R&D budget was earmarked for industry, startups, and academia.
- BrahMos Model: Scaling the success of the BrahMos Joint Venture to other platforms like the Fifth Generation Advanced Medium Combat Aircraft (AMCA).
Strategic & Structural Challenges in India’s DIB:
1. The “Critical Technology” Gap
- Engine Technology: Despite decades of the “Kaveri” project, India still imports jet engines for the Tejas (GE-404/414).
- Dependency on Raw Materials: We are highly dependent on imports for specialized alloys, carbon fibers, and semiconductors (the “brains” of modern missiles and drones).
2. R&D and Innovation Hurdles
- Low Investment: India’s Gross Expenditure on R&D (GERD) remains stagnant at ~0.64% to 0.7% of GDP, whereas China and the US spend over 2.4% and 3.4% respectively.
- DRDO-Industry Gap: The transition of technology from DRDO labs to private production lines is often slow, leading to “technological obsolescence” by the time the product is mass-produced.
3. Private Sector Participation vs. DPSU Dominance
- Level Playing Field: Defense Public Sector Undertakings (DPSUs) like HAL and Mazagon Dock still receive the majority of large “Nomination-based” contracts.
- Capital Intensity: Defense is a “high-risk, long-gestation” sector. MSMEs often struggle with high cost of capital and the lack of guaranteed long-term orders, making it difficult for them to invest in specialized machinery.
4. Bureaucratic and Procedural Red Tape
- The “L1” Syndrome: The government’s traditional preference for the “Lowest Bidder” (L1) often compromises quality and discourages innovation-led firms that have higher R&D costs.
- Trial and Evaluation Delays: The process of “Field Evaluation Trials” (FET) in diverse terrains (Himalayas to Thar) is exhaustive and can take years, delaying the induction of critical equipment.
5. Quality Control and Safety Standards
- Standardization: There is a lack of a unified National Defense Quality Assurance framework that aligns Indian standards with global NATO or MIL-SPEC standards, which hinders the export potential of Indian components.
A Multi-Pronged Roadmap for India’s DIB:
1. Technological Leapfrogging (Beyond Assembly)
- Focus on High-End Propulsion: India must address its “Propulsion Gap.” Reviving the Kaveri Engine project or entering into co-development deals (like the GE-F414 for AMCA) is critical for true aerospace autonomy.
- Dominance in Emerging Domains: Shift R&D focus toward “Non-Kinetic” warfare—AI-driven autonomous systems, Quantum communication, and Directed-Energy Weapons (DEWs).
- Defense “Unicorns”: Following the Defense Minister’s 2025 call, the government should provide “Catalytic Capital” to help at least one Indian defense startup achieve Unicorn status, signaling a mature innovation ecosystem.
2. Fiscal & Procedural Streamlining
- Predictable Order Pipeline: Under DPM-2025, startups should be provided with assured 5+5 year orders. This predictability allows private firms to secure long-term capital and invest in specialized machinery.
- Defense Budget Realignment: Aligning with the Shekatkar Committee recommendations, India should aim to move its defense budget toward 2.5% – 3% of GDP, with a larger slice specifically for Capital Modernization rather than just revenue expenditure (salaries/pensions).
- L1 to T1 (Quality over Cost): Transition from the “Lowest Bidder” (L1) model to a “Value-Based Procurement” that rewards technological superiority and lifecycle costs.
3. Institutional & Regulatory Reforms
- Civil-Military Fusion: Breakdown the “silos” between DRDO, private industry, and the Academia. Establishing a National Defence University (NDU) can create a cadre of “technologist-commanders” who understand both battlefield needs and industrial capacity.
- Single-Window Testing: Create Public-Private Partnership (PPP) testing facilities within the Defense Industrial Corridors. This reduces the time-to-market for indigenous products.
- Theater Commands & Logistics: Implementing Integrated Theatre Commands will streamline the “Statement of Case” (SoC) for equipment, ensuring the DIB produces what the services collectively need, rather than fragmented service-specific demands.
4. Export-Led Growth (Global Footprint)
- Comprehensive Defense Diplomacy: Offer “Full-Package Deals”—not just the hardware (Tejas, BrahMos) but also Training, Maintenance, and Repair (MRO) services to Friendly Foreign Countries (FFCs).
- Strategic Lines of Credit: Use Defense Lines of Credit to help Southeast Asian and African nations purchase Indian-made platforms, as seen with the Philippines-BrahMos deal
Conclusion:
The transformation of the Indian Defence Industrial Base from a “Buyer’s Base” to a “Builder’s Hub” is the cornerstone of India’s strategic autonomy. By merging Mission Vatsalya-style digital tracking for project management with BrahMos-style joint ventures, India can secure its borders while fueling its $5 trillion economy.
