Impact of Atma Nirbhar Bharat Initiative on India’s Defence Sector

Syllabus: GS3/ Defence

Context

The Atma Nirbhar Bharat initiative has transformed India’s defense sector, with a surge in domestic defense production and exports.

According to the Defence Ministry, the value of defense production in India has gone up to ₹1,26,887 crore in FY 2023-24, reflecting a growth of 16.7% over the defense production of FY 2022-23.
- Of the total value of production in 2023-24, about 79.2% has been contributed by the Public Sector and 20.8% by the private sector.
India’s defense budget of US$ 74.7 billion ranked fourth highest globally in 2024.
Defense exports was ₹21,083 crore in FY 2023-24, reflecting a growth of 32.5% over the last fiscal when the figure was ₹15,920 crore.
- India has set a target of US$ 6.02 billion worth of annual defense exports by 2028-29.
India has developed major defense platforms such as the Dhanush Artillery Gun System, Advanced Towed Artillery Gun System (ATAGS), Main Battle Tank Arjun, Light Combat Aircraft Tejas, and submarines etc.

Self-defense: The presence of hostile neighbors like China and Pakistan makes it necessary for India to boost its self-defense and preparedness.
Strategic advantage: Self-reliance will make India’s geopolitical stance strategically stronger as a net security provider.
Technological advancement: Advancement in the defense technology sector will automatically boost other industries hence catapulting the economy further ahead.
Economic drain: India spends around 3% of GDP on defense and 60% of that is spent on imports. This leads to an immense economic drain.
Employment: Defence manufacturing will need the support of numerous other industries which generate employment opportunities.

Narrow Private Participation: Private sector participation in the defense sector is constrained by the lack of a conducive financial framework, that means our defense production is unable to benefit from modern design, innovation, and product development.
Lack of Critical Technology: Lack of design capability, inadequate R&D investment, inability to manufacture major subsystems and components hamper indigenous manufacturing.
Lack of Coordination Between Stakeholders: India’s defense manufacturing capability is hindered by overlapping jurisdictions between the Ministry of Defence and the Ministry of Industrial Promotion.

IDR Act: Defence Products list requiring Industrial License has been rationalized and manufacture of most of parts or components does not require Industrial License.
- The initial validity of the Industrial Licence granted has been increased from 03 years to 15 years with a provision to further extend it by 03 years on a case-to-case basis
Government schemes such as iDEX (Innovations for Defence Excellence) and DTIS (Defence Testing Infrastructure Scheme) to enable innovation within the Defence & Aerospace ecosystem.
FDI in the Defence Sector has been enhanced up to 74% through the Automatic Route and 100% by Government Route, to promote export and liberalize foreign investments.
The government has established 2 dedicated Defence Industrial Corridors in the States of Tamil Nadu and Uttar Pradesh to act as clusters of defense manufacturing that leverage existing infrastructure, and human capital.
Defence Production and Export Promotion Policy 2020 (DPEPP): The Ministry of Defence (MoD) has formulated a draft DPEPP 2020 as a guiding document of MoD to provide a focused, structured, and significant thrust to defense production capabilities of the country for self-reliance and exports.
In 2021, Defence Acquisition Council (DAC) boosted the ‘Make in India’ initiative by Acceptance of Necessity (AoN) — to capital acquisition proposals worth US$ 1.07 billion (Rs. 7,965 crore) — for modernisation and operational needs of armed forces.

Green Channel Status Policy (GCS) has been introduced to promote and encourage private sector investments in defense production to promote the role of private sector in defense production.
India has around 194 defense tech startups building innovative tech solutions to empower and support the country’s defense efforts.
With the government’s emphasis on easing restrictions on foreign investment in order to achieve India’s goal of an Atmanirbhar Bharat, the growth trajectory of the Indian defense sector remains strong.

Source: AIR

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