The Indian Defence Industry

Deciphering a Multifaceted Growth for Private Participation

The area of Defence has undoubtedly been one of the most highly sensitive sectors for any country, particularly due to the strong connect it has with national security and sovereignty. Couple this with the shoot up of global terror attacks – warranted by the disappearance of territorial borders from globalization and technology - along with escalating tensions amongst various nations, having a well-equipped defence system in place is paramount.

In light of this, many countries have kicked in their military expenditure, with global defence spending on the rise since 2011. India has changed gear to transform its originally import-led defence industry into one that is self-reliant in nature. The rising import bill, which has leapt by 43% between 2007-2011 and 2012-16, presents a huge concern as it signals the Indian market is overly-dependent on other nations for its arms. This has prompted rapid change in this sector over the recent years, driving the government to re-design policies and align the “Make-in-India” initiative to encourage domestic manufacturing to a new level.

This basically means lifting up regulatory barriers and opening up the ground to private participation, which could in-turn help generate and disseminate the expertise required behind Defence-related production across the country. Specifically, the government has revamped some key market levers in this industry, which include easing out the industrial licensing process, simplifying FDI flows, streamlining capital expenditure towards modernization, and encouraging greater offsets, which in turn creates opportunities towards indigenization. This would subsequently boost local employment in this sector, prompting domestic players to skill workers and conduct extensive R&D, as the entire market competes on superior quality products. 

Broadly speaking, having innate capabilities in-house will undoubtedly bring in a multitude of benefits – from monetary savings in imports, to having unparalleled national protection.

This publication talks about the evolution of the Indian Defence Industry till date, along with the changes taken presently that will ultimately shape its future in the time to come. Click on the image below to download the complete report. 

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