Defence manufacturing and indigenisation

India is one of the world's largest importers of arms, a position governments have long described as a strategic weakness. Defence manufacturing policy tries to reverse it: build more equipment at home, develop domestic design capability, and eventually export. The buyer is unusual, because the government is both the main customer and the regulator, so procurement rules decide industrial outcomes more directly than in most sectors.

The Defence Acquisition Procedure of 2020 governs how the armed forces buy equipment, with categories that give priority to Indian-designed and Indian-made products. Positive indigenisation lists name items that will no longer be imported after a given date, forcing the services and industry to find domestic sources. The Innovations for Defence Excellence scheme, known as iDEX, funds start-ups and small firms to solve specific defence problems, opening a door that large public sector units once dominated.

Public sector units remain central: ordnance factories were corporatised in 2021 into seven defence public sector undertakings, and firms such as Hindustan Aeronautics and Bharat Electronics build aircraft, radars and electronics. Alongside them, private firms now make components, drones, ammunition and increasingly complete systems. The mix raises a management question: how to keep public capacity for strategic items while letting private competition improve cost and speed.

Exports have become a stated goal, with the government pointing to rising defence exports as evidence that domestic industry is maturing. Export growth should be read carefully: it includes components and smaller systems as well as complete platforms, and it depends on foreign buyers' trust in quality, delivery and after-sales support. Strategic controls also limit what can be sold, to whom, and with what technology, so defence exports are never purely commercial.

The deeper test is design, not assembly. A country that assembles imported kits at home still depends on foreign suppliers in a crisis. Indigenisation therefore has to be judged by design ownership, critical components such as engines and sensors, and the ability to upgrade and repair equipment without foreign permission.