India's Defence Sector Growth: A Path to Atmanirbhar Bharat

For India, the path ahead of becoming a completely ‘Aatma Nirbhar Bharat’ (Self-Reliant India), this path of indigenization in defense is a paramount path toward attaining self-sufficiency. In the wake of raising indigenous manufacturing and technological, strategic independence and National security, Indian defense has emerged as a vital segment for lofty economic growth. Due to the geographical location of India and the various security threats it faces a strong defense framework is imperative. Atma Nirbhar Bharat includes which focuses on cutting dependence on imports and developing new capabilities to meet the requirements of contemporary warfare.

Current Trends

Production Growth:

• The spending on defense production is expected to rise at a CAGR of 20% over the years FY24 to FY29.

• Production raised by ₹ 34,630 crore from ₹74,054 crore in the financial year 2016-17 to ₹108,684 crore in the financial year 2022-23.

Defence Budget:

• Budgetary allocation for FY24-25 is ₹ 6.22 lakh crore.

• The military budget is 1.9-2.8% of GDP unfailingly.

Indigenous Manufacturing:

• Backed by ‘Make in India’ to reduce dependence on foreign machinery.

• 7% of Indian defense equipment is manufactured by state-owned enterprises, 10.32% by joint ventures, and 21.96% by private sector firms.

Defence Exports:

• Growth of 28% over the last 6 years and it is estimated to grow at 19% by FY29.

• The export level during FY23-24 was ₹21,083 crore with an Export target of ₹50,000 crore for 2028-29.

• Export partners: Among the total 85 countries, the major importing nations include Myanmar with 31%, SriLanka 19% and other nations are Mauritius: 17%, Nepal: 13%, and Vietnam: 9%.

Advantages of Growth

• Self-Defence: Indispensable for dealing with threat posed by unfriendly neighbors in South Asia including China and Pakistan.

• Strategic Strength: Increases the capacity of India as a net security provider.

• Technology Boost: Similarly to the prior examples, defence innovation has a positive spillover effect on other sectors.

• Economic Benefits: This in the process reduces the economic drain that is occasioned by dependency on imports.

• Employment Generation: Provides a boost in employment opportunities within many sectors.

Concerns

• Narrow Private Participation: Few financial architectures define the extent of the private sector’s engagement.

• Lack of Critical Technology: Insufficient level of funds spent on Research and Development and on subsystem construction slows down the development.

• Coordination Issues: The conflict of authorities slow down processes and organizing.

Government Initiatives

• Simplification of Export Processes:

  • India Defence Mart: An effective and efficient online location for export licenses and tracking applications.

  • Scheme for Promotion of Defence Exports (SPDE): Grant for promoting Indian products in the foreign market.

• Technology Modernization:

  • Technology Upgradation Fund Scheme (TUFS) to modernize the existing facilities.

  • The Strategic Partnership Model promotes cooperation with overseas companies, pointing to the fact that they are doing business in the home country.

• FDI Liberalization:

  • automatically increased FDI up to 74% by Automatic Route and up to 100% by Government Route.

• Defence Industrial Corridors:

  • Separated corridors in Tamil Nadu will enhance the manufacturing of vehicles while Uttar Pradesh will solely focus on this sector.

• Startup Support:

  • Around 194 defence tech startups are innovating defence solutions.

Way Forward

Private Sector Integration: Green Channel Status Policy to attract private investments.

Atmanirbhar Bharat Focus: enhancing policies to ensure defence self sufficiency.

Global Recognition: This has an implication of improved exportation which an endorsement of country’s defence products manufactured in India.

R&D Investment: Enlarge focus on critical technologies that have to be developed and improved to make improvements to the organizational performance.

Conclusion

The defence industry of India is the key significant area for ‘Make in India’, which has emerged as the foundation of the Atma Nirbhar Bharat principle in the changed global circumstances. However, new opportunities are still waiting to be found; the positive conditions set by the Government, and increased participation of the private sector in the management of transformation indicate the availability of a solid groundwork for a radical change. The time has come for India to capitalize on the demographic dividend, win big in the technological revolution, and strengthen strategic partnerships to become the global hub for defense manufacturing and innovation. The success of this mission will not only defend India’s sovereignty but also strengthen India’s position for playing a major role in determining the global security agenda.