The Government of India (GoI), over the past few years, has demonstrated its focus towards reducing its disproportionate dependence on imports for meeting the requirements of the Indian armed forces. Now, as India’s security concerns in its immediate neighbourhood remain and as its increased engagement in the global geo-political arena becomes more evident, the pressure of enhancing the capabilities of the armed forces is now greater than ever.
A slew of defence policy reforms and initiatives by the government have been focussed on adoption of modern technology in the defence sector while also improving its domestic manufacturing capability. India aspires to develop a defence manufacturing ecosystem worth USD25 billion by 2025 and exporting USD five billion of defence equipment annually by the same timeframe1. GoI’s crucial initiatives such as ‘Make in India’ and ‘Atmanirbhar Bharat’ consider defence as a key sector for achieving the target. The defence manufacturing capabilities in the country are evolving, and the need to collaborate with global defence suppliers is now more pertinent than ever.
The base of the Indian A&D value chain comprises of nearly 12,000 Micro, Small and Medium Enterprises (MSMEs) that provide platform critical goods and services to the Tier I/II entities and enterprises. The MSME supply chain has grown by 58 per cent over the past four years and will continue to grow proportional to the domestic growth drivers and policies instituted by the Government.
A major step to encourage defence manufacturing in India is the allocation of 68 per cent of the capital procurement budget to domestic industry in 2022-23. And to catalyse more innovation in defence technology, 25 per cent of India’s defence R&D budget has been earmarked for private industry and start-ups and the Innovations for Defence Excellence (iDEX) platforms aims to create an ecosystem for innovation and technology development in the defence and aerospace sectors.
Robust growth potential of the industry is attracting global OEMs into the A&D sector to setup facilities in India. MoD is focusing on increasing private sector participation and defence exports. The focus is not only on the expansion of the existing defence market but also looking at arenas to strengthen indigenous manufacturing and development of very large platforms including fighter aircraft, helicopters, tanks and submarines through a Strategic Partnership model.
India offers immense growth opportunities for foreign players through partnerships and in this paper, we intend to highlight key opportunities in the Indian A&D sector while also providing insights on the regulatory and policy front.
We strongly believe the future of UK involvement in this market is co-creation, co-development and making in and with India. Essentially, ‘create in India.’
