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India’s quest for defence indigenization has transitioned from aspiration to execution, guided by strategic foresight, national pride, and an urgent need to reduce dependence on foreign suppliers. This movement is rooted in the vision of Aatmanirbhar Bharat (Self-Reliant India), aiming to develop a robust, innovative, and export-ready defence industrial base. As geopolitical threats evolve and technology becomes a key battleground, India is channeling policy, innovation, and industry partnerships to secure its sovereignty and establish itself as a global defence player.With a renewed focus on reducing import dependency, fostering innovation, and empowering domestic industries, the nation is rewriting its defence narrative. Here’s an in-depth look at the milestones, challenges, and future roadmap.
Policy Catalysts: Driving the Indigenization Agenda
India is navigating a complex strategic landscape, facing challenges from neighboring countries with significant military capabilities. With historical tensions persisting with China and Pakistan, maintaining operational readiness is imperative to address active border threats and respond to regional dynamics. India has been a major arms importer, and while it’s been reducing its reliance on foreign suppliers, it still remains a significant importer of defense equipment. Between 2019 and 2023, India was the world’s largest arms importer, with a 9.8% share of global imports.
India’s defence policies have undergone a transformation with clear intent to promote local production and innovation. Launched in 2014, the Make in India initiative has catalyzed a transformative shift in the country’s defence sector by prioritizing domestic manufacturing, attracting foreign investment, creating jobs, and elevating technological capabilities. A series of strategic reforms underscores this commitment. By 2023, successive import embargo lists covering 411 defence items have redirected approximately ₹2.5 lakh crore (USD 30 billion) worth of contracts to Indian firms. A key milestone came in 2021 with the corporatization of the Ordnance Factory Board, which converted 41 units into seven specialized Defence Public Sector Undertakings (DPSUs)—a move designed to unlock greater efficiency, competitiveness, and innovation.
Gradual Improvement in Defence Procurement Procedure
India’s Defence Procurement Procedure (DPP), first established in 2002, has undergone iterative reforms to enhance efficiency, transparency, and self-reliance in defence acquisitions. The evolution from DPP 2016 to the Defence Acquisition Procedure (DAP) 2020 marks a strategic shift toward prioritizing indigenous manufacturing through categories like Buy Indian-IDDM (Indigenously Designed, Developed, and Manufactured), mandating up to 60% domestic content in critical projects. Recent updates introduced leasing provisions to reduce upfront costs for niche equipment and a dedicated Innovation category to empower startups and MSMEs in developing cutting-edge technologies like AI-driven systems and drone swarms. The DAP 2020 also streamlined approvals via a Single Stage Accord for projects under ₹500 crore and established a Project Management Unit (PMU) to expedite decision-making. These reforms align with India’s embargo on 411 defence imports, redirecting ₹2.5 lakh crore ($30 billion) toward domestic production while fostering partnerships with global firms under liberalized FDI policies. Despite progress, challenges persist in technology absorption and quality assurance, yet the DAP’s phased enhancements underscore India’s resolve to transform into a global defence manufacturing hub under the Aatmanirbhar Bharat vision.
Further boosting domestic and global investor confidence, foreign direct investment (FDI) limits in the defence sector were raised to 74% through the automatic route, resulting in FDI inflows exceeding ₹1.9 billion in 2023. Complementing these measures, the Indian government has mandated 50–70% indigenous content across various procurement categories to ensure meaningful participation by local industries. Additionally, the establishment of Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu is fostering regional hubs of advanced defence manufacturing. Collectively, these initiatives mark India’s steady emergence as a global defence manufacturing powerhouse and reaffirm its vision of Aatmanirbhar Bharat—a self-reliant India.
A major initiative in this direction is the expanded series of Positive Indigenization Lists, culminating in the fourth list released in 2023. This restricts the import of 101 additional defence items such as UAVs, loitering munitions, and next-generation torpedoes, redirecting an estimated ₹2.1 lakh crore ($25 billion) in contracts to Indian manufacturers by 2025.
The Defence Acquisition Procedure (DAP) 2020 has become the backbone of procurement reform, giving priority to Indigenously Designed, Developed, and Manufactured (Buy Indian-IDDM) equipment. With mandates for 50% indigenous content, it introduces leasing options for critical equipment, accelerates procurement through fast-track mechanisms, and promotes innovation via the iDEX initiative, which now engages over 300 startups and MSMEs with ₹1,000 crore earmarked for R&D. Complementing this is the Defence Production and Export Promotion Policy (DPEPP) 2020, which aims for $25 billion in annual defence manufacturing turnover. Strategic projects like Tata-Airbus’s ₹22,000 crore C-295 aircraft manufacturing facility in Gujarat, along with a record-breaking ₹16,000 crore in defence exports in FY 2022-23, signify the tangible momentum achieved.
Technological Milestones: From Labs to Battlefields
India’s defence R&D, led by DRDO, is beginning to bear significant fruit. The successful test of the Agni-5 equipped with MIRV (Multiple Independently Targetable Reentry Vehicle) technology has placed India in an elite strategic club. Indigenous platforms like the LCA Tejas Mk1A—with 83% local content—demonstrate substantial progress in aerospace engineering. The Zorawar light tank, tailored for high-altitude deployment, reflects India’s readiness to meet the challenges posed by its northern borders.
Private industry players are also rising to the occasion. Larsen & Toubro, for instance, has become a major supplier of K9 Vajra howitzers and submarine components, while Alpha Design Technologies produces critical avionics for platforms like the Sukhoi-30MKI and BrahMos missiles. This synergy between public R&D and private enterprise is central to India’s growing self-reliance.
Empowering MSMEs: The Backbone of Innovation
India’s defence indigenization journey is deeply rooted in the capabilities of its Micro, Small, and Medium Enterprises (MSMEs), which now contribute between 20% to 25% of total defence production.
The Indian government has intensified efforts to empower MSMEs as pivotal contributors to the defence ecosystem, aligning with the Aatmanirbhar Bharat vision. Simplified procurement processes now enable MSMEs to bid for defence contracts through platforms like the SRIJAN Portal, which lists over 25,000+ vendors and streamlines eligibility criteria for niche projects such as drone components and electronic warfare systems.
To address financial barriers, ₹1,000 crore has been allocated under the Technology Development Fund (TDF), offering grants of up to ₹10 crore per project for innovations like AI-driven surveillance and hypersonic tech, while the SIDBI Defence ESG Fund provides low-interest loans to 500+ MSMEs.
Skill development is prioritized via partnerships with IAI (Israel Aerospace Industries) and NASSCOM, training 15,000+ professionals annually in UAV manufacturing, cybersecurity, and precision engineering through initiatives like SAMARTH Udyog. These measures have spurred a 300% increase in MSME participation since 2020, with firms like Tonbo Imaging (thermal optics) and Axiscades (engine controls) securing contracts worth ₹8,000 crore, driving India’s defence exports to a record $1.9 billion in 2023. By bridging gaps in funding, skills, and market access, India is nurturing a globally competitive MSME network poised to deliver 30% of defence production by 2025.
MoD Unveils Fifth Indigenisation List Covering 346 Defence Items
In a significant advancement toward achieving self-reliance in defence manufacturing, the Department of Defence Production (DDP) under the Ministry of Defence has announced the fifth Positive Indigenisation List (PIL) comprising 346 strategically important items. This move is a continuation of India’s broader Aatmanirbhar Bharat initiative, aiming to reduce import dependency, boost indigenous manufacturing, and drive innovation in the defence sector. The newly announced items—ranging from Line Replacement Units and Systems to Sub-systems, Assemblies, Sub-assemblies, Spares, Components, and Raw Materials—collectively carry an import substitution value of ₹1,048 crore. As per the indigenisation timelines specified, these items will now be exclusively sourced from Indian industry through a phased and structured approach.
The list is publicly available on the Srijan portal, a dedicated platform launched by the Ministry of Defence in 2020 to connect Defence Public Sector Undertakings (DPSUs) and Service Headquarters (SHQs) with Indian manufacturers. The portal has emerged as a vital enabler for facilitating the indigenisation of defence products by encouraging partnerships with domestic industry players, including startups and MSMEs. By providing transparency and structured opportunities, the platform has fostered increased engagement from the private sector in defence production.
This announcement marks another milestone in Prime Minister Narendra Modi’s vision for an Aatmanirbhar Bharat, with Defence Minister Rajnath Singh leading the push for indigenisation in critical sectors. The fifth PIL empowers major DPSUs such as Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), and Bharat Dynamics Limited (BDL), among others, to undertake in-house development or collaborate with private firms under the ‘Make’ procedure to achieve the targeted indigenisation.
The government views this initiative not only as a defence strategy but also as an economic growth engine. By stimulating demand for indigenous components and systems, the PIL is expected to drive investments in R&D, manufacturing, and supply chain development. It will further reinforce India’s capability to design and produce complex systems domestically while fostering academia-industry-research collaborations to build future-ready technologies.
The fifth list builds upon the success of the previous four PILs, through which 2,972 out of 4,666 items have already been indigenised, representing an import substitution worth ₹3,400 crore. These lists have significantly reduced India’s reliance on imported equipment and components and have helped streamline the development of a robust domestic defence ecosystem.
Parallel to this, the Department of Military Affairs (DMA) has released positive indigenisation lists for 509 items, focusing on high-tech equipment such as sophisticated systems, sensors, weapons, and ammunition. Together, these efforts underline a systemic shift in India’s defence procurement paradigm from import-led to indigenisation-focused.
Since June 2024, DPSUs and SHQs have collectively listed over 36,000 items for indigenisation, resulting in more than 12,300 items being successfully developed within the country over the past three years. As a testament to this progress, domestic vendors have received orders worth ₹7,572 crore from DPSUs, underscoring the growing trust and capability of India’s industrial base to meet critical defence requirements.
India’s continued commitment to defence indigenisation is paving the way for a more secure, self-sustaining, and technologically advanced future. With each successive list and initiative, the country moves closer to its goal of becoming a global hub for defence innovation and manufacturing.
Challenges and Strategic Responses
Despite significant advances, India continues to face challenges in areas such as high-end technology access, quality assurance, and financing for innovation. To address the technological gap, India has embraced joint ventures and offset clauses that mandate technology transfers. BrahMos Aerospace stands out as a model, blending Indian and Russian expertise.
To improve product quality and reduce delays in certification, the Defence Testing Infrastructure Scheme (DTIS) is creating state-of-the-art testing labs—30 of which are already functional. On the financing front, MSMEs now have access to a ₹1,000 crore Defence ESG Fund by SIDBI, providing low-interest loans for tech development and infrastructure.
Global Partnerships and Export Ambitions
India’s defence diplomacy is increasingly export-oriented. The successful sale of BrahMos missiles to the Philippines marks a turning point, with other countries like Indonesia and the UAE showing interest. The TEJAS fighter jet is also a strong contender in international tenders, including Malaysia’s search for light combat aircraft.
In parallel, India is forging powerful collaborations with global players. The agreement with GE Aerospace to co-produce F414 jet engines for the TEJAS Mk2 not only enhances India’s aero-engine capabilities but also strengthens its global industrial footprint.
The Road Ahead: 2025 and Beyond
Looking ahead, India has set ambitious but achievable targets. The aim is to achieve 70% indigenous defence production by 2027 and reach $5 billion in annual exports by 2025. Future-ready initiatives are also gaining ground—green defence technologies like solar-powered drones and hydrogen-based propulsion for naval vessels are in development, pointing to a sustainable defence posture.
Cyber and space warfare are also being prioritized. The formation of the Defence Cyber Agency and collaboration between ISRO and DRDO on satellite surveillance systems indicate a shift toward modern, multidomain warfare readiness.
Conclusion: A Sovereign Future
India’s defence indigenization journey has reached a pivotal juncture. With 2,920 of 4,666 defence items already localized, the movement is transitioning from intent to impact. Strategic reforms, empowered MSMEs, technological breakthroughs, and global collaborations are shaping India into a formidable defence manufacturing hub. As Defence Minister Rajnath Singh aptly said, “The era of dependency is over; the age of Aatmanirbharta has begun.”
This is not just a new chapter—it is a new era in India’s defence history, where sovereignty is secured through self-reliance and sustained innovation.
