India’s defence sector is experiencing a significant transformation with increased private sector involvement, fostering innovation and modernisation. Government initiatives like Atmanirbhar Bharat and Make in India, along with supportive policies, are driving indigenous capabilities and attracting foreign investment.
The last couple of decades have been particularly lucrative for the Indian private sector. This has been observed across diverse industries in the country. The burgeoning involvement of private firms in the economy has boosted the entrepreneurial landscape tremendously. Therefore, it’s only natural for this trend to trickle down to the defence space too. Up until a few years ago, this department used to rely solely on PSUs and government-backed institutions. As a consequence, the Indian Defence inventory still incorporates legacy equipment and somewhat orthodox systems from the decades gone by.
Now, while these were the state-of-the-art and cutting-edge components for a long time, the current need for professional maintenance, repair and overhaul (MRO) is inevitable. With immense advancements in technology, new-age companies have spawned, wherein they leverage the latest information and R&D to develop innovative and intelligent engineering solutions to tackle these issues. In fact, the lives of ageing platforms can be enhanced by reverse-engineering critical components or reconditioning the entire systems.
With indigenous expertise, knowledge, R&D, engineering and talent, an entire ecosystem can be established. Ambitious government initiatives like Atmanirbhar Bharat and Make in India are playing a pivotal role in shaping up this industry. Furthermore, efficient and visionary policy-making to nurture MSMEs and startups is bound to form a rugged foundation for an evolved India in the coming years. In order to become a global superpower, the relevance of an imposing defence sector can’t be underestimated.
Modern warfare relies heavily on the technological superiority of one nation over another. Common themes in this regard include AI-based surveillance, electronic warfare modules, drones, real-time data processing, precision electronics, advanced sensors, digitally enhanced control systems, high-end tech integration, etc. Now it is understood that such extensive upgradation and overhaul is not possible overnight. Nevertheless, the Indian armed forces need to maintain operational readiness, while simultaneously strive to integrate next-generation of defence equipment.
This is exactly where new startups, MSMEs or modernised legacy players gain prominence. These create a substantial vacuum for experimentation and breakthrough tech to emerge, which could potentially shape the future of the nation. In fact, in recent times, many such companies have spawned, via academic partnerships and government backing, which have developed pertinent products for the Indian defence services. The high-speed Kamikaze drones and similar indigenous arsenal are prime examples of that.
In addition to that, India’s defence manufacturing has gained a lot from the eminent policy decisions by the government. The Defence Acquisition Procedure (DAP) 2020 and Production Linked Incentive (PIL) schemes lead the charge in this aspect. Moreover, many indigenous procedures, players, suppliers and entrepreneurs are being supported by the government to accentuate domestic capabilities.
On the other hand, the role of the private sector can further be ascertained by the creation of the Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu, along with initiatives like iDEX and the Technology Department Fund (TDF). These robust initiatives and programs ensure funding, simplifying licensing, offering co-development opportunities and minimising hurdles for startups and legacy players alike.
In addition to that, the record defence budgets towards procurement of domestic goods, ever-increasing FDI (Foreign Direct Investment) thresholds, structured incentives for tech partnerships, projects being open for joint ventures, private sector bids, etc., create a conducive and enticing environment for this industry to grow exponentially. Admittedly, in previous years, there have been a few bottlenecks, preventing uninhibited growth. Things like regulatory clearances, certification challenges, vague procedures, etc., were concerns, especially for foreign investors. Hence, concrete measures need to be taken in this direction to enable a smooth operation. It will unequivocally make this industry attractive for startups, legacy companies, as well as collaborators from all over the globe.
In inference, India has overtly benefitted from privatisation in various sectors in the last few years. Private enterprises often infuse innovation, speed, strategic agility, thorough R&D, speed, latest technology into systems to generate cutting-edge sectors, which keep up with the existing times. Along with that, they are future-ready with an eye out for upcoming tech, which is a crucial insurance for any modern firm to evolve and pivot constantly and swiftly. The co-operation between private and public sectors can become the architect for India’s strategic future, along with making India a competitive exporter of defence systems in the times to come.