Record order books, rising exports: Nirmal Bang’s Jyoti Gupta on why defence remains a long-term growth story

India's defence sector, traditionally characterized by heavy reliance on imports, is currently undergoing a transformative multi-year upcycle, marking a significant pivot towards self-reliance and export-led growth. This shift is not merely an economic phenomenon but a strategic imperative, deeply intertwined with India's national security, economic prosperity, and geopolitical ambitions. The journey began decades ago with nascent efforts at indigenous production, but it has gained unprecedented momentum in recent years under the 'Make in India' and 'Atmanirbhar Bharat' (Self-Reliant India) initiatives.

The current upcycle, as highlighted by experts like Jyoti Gupta, is primarily driven by three interconnected factors: record domestic order books, a determined push for indigenisation, and a burgeoning export market. The government, through the Ministry of Defence (MoD), has placed substantial orders with domestic manufacturers, both public and private, to meet the armed forces' modernisation needs. This creates a stable demand base, encouraging investment and capacity building within India. Simultaneously, policies like the 'Negative Import List' (or 'Positive Indigenisation List') for various defence items, first introduced in August 2020, have systematically banned the import of specific equipment, forcing domestic production and fostering a robust ecosystem for indigenous research, development, and manufacturing. This list has been progressively expanded, now covering hundreds of items, signaling a clear long-term commitment. The third pillar is the growing export demand for Indian-made defence products, ranging from missiles like Akash, BrahMos, to patrol vessels, radars, and even advanced light helicopters. India aims to achieve a defence export target of USD 5 billion by 2025, a significant leap from previous figures.

Several key stakeholders are instrumental in this transformation. The **Government of India**, primarily through the **Ministry of Defence**, acts as the chief policy maker, regulator, and largest procurer. Its policies, such as the Defence Acquisition Procedure (DAP) 2020 (which replaced the earlier Defence Procurement Procedure, DPP), prioritize 'Buy Indian – IDDM' (Indigenously Designed, Developed, and Manufactured) categories. **Defence Public Sector Undertakings (DPSUs)** like Hindustan Aeronautics Limited (HAL) and Bharat Earth Movers Limited (BEML), mentioned in the article, have historically been the backbone of indigenous production. The **Defence Research and Development Organisation (DRDO)** plays a crucial role in developing cutting-edge technologies. Increasingly, the **Indian private sector**, including companies like Data Patterns and Solar Industries, along with larger conglomerates like Larsen & Toubro and Bharat Forge, is emerging as a vital partner, bringing efficiency, innovation, and global best practices. Finally, the **Indian Armed Forces** are the ultimate beneficiaries and end-users, providing vital feedback and requirements.

This defence sector upcycle holds profound significance for India. Economically, it contributes to **GDP growth**, creates **high-skilled employment opportunities**, and reduces the substantial **foreign exchange outflow** associated with defence imports. It also fosters a culture of innovation and technological advancement, with spin-off benefits for other sectors. Strategically, enhanced indigenous capabilities reduce India's vulnerability to external pressures and supply chain disruptions, thereby strengthening its **strategic autonomy**. It allows India to project power more effectively and positions it as a potential net security provider in the Indian Ocean Region and beyond. Geopolitically, a strong defence manufacturing base enhances India's leverage in international relations and its ability to forge strategic partnerships.

Historically, India's defence industrialization efforts post-independence were largely state-driven, aiming for self-sufficiency but often constrained by technology denial regimes and limited private sector participation. The Cold War era saw a significant reliance on the Soviet Union for defence equipment. The liberalization reforms of the 1990s gradually opened the sector to private players, but the real impetus came with the 'Make in India' initiative launched in 2014, which specifically identified defence as a priority sector. The corporatization of the Ordnance Factory Board (OFB) into seven new DPSUs in 2021 is another major reform aimed at improving efficiency and accountability.

Looking ahead, the future implications are promising but not without challenges. India is poised to become a significant global player in defence manufacturing and exports, potentially moving beyond being merely an importer. Continued policy support, increased R&D investment, and skill development will be crucial. However, challenges such as bridging critical technology gaps, ensuring timely execution of projects, streamlining bureaucratic processes, and fostering a truly competitive environment for both public and private players need to be addressed. The government's vision aligns with the constitutional mandate of ensuring national security, which falls squarely under the **Union List (Entry 1 and 2 of the Seventh Schedule of Article 246)**, granting the Parliament exclusive power to legislate on defence matters. Policies like DAP 2020 and the revised FDI policy (allowing up to 74% FDI under automatic route and 100% via government route in specific cases) are key instruments in realizing this vision, ensuring a self-reliant and technologically advanced defence ecosystem for India.