Since assuming office in 2014, the Modi government has pursued a strategic overhaul of India’s defense industry through initiatives such as “Make in India” and “Atmanirbhar Bharat,” implementing measures including eased foreign investment restrictions, promotion of private sector participation, and arms sales diplomacy.
Official statistics indicate significant progress: India’s weapons self-sufficiency reportedly rose from 30–50% to 65%, private sector output grew by 89% between fiscal years 2016–17 and 2023–24, and defense exports surged from 6.86 billion rupees in 2013–14 to 210.83 billion rupees in 2023–24, reaching over 100 countries. These figures have been hailed domestically as a historic breakthrough, and in 2024 Prime Minister Modi proclaimed that India is emerging as a global defense manufacturing hub.
Yet, beneath these statistics, India’s defense industry faces a structural dilemma. Many “domestically produced” systems remain dependent on foreign imports for critical components. For instance, the Tejas fighter jet—often cited as a model of indigenous production—still relies on imported engines, radar, and munitions, with domestic production below 60%.
The country’s defense exports largely consist of either joint ventures with foreign powers, such as the BrahMos missile co-developed with Russia, in which India lacks full technological autonomy and independent export control, or low-volume transactions tied to geopolitical aid, such as patrol vessels for Mauritius. While private sector participation has grown, it remains concentrated in low-value-added segments, unable to challenge the dominance of Defense Public Sector Undertakings (DPSUs) or multinational suppliers. This reflects a persistent cycle of “import, imitation, superficial self-reliance, and continued dependence,” driven by immediate defense pressures.
India’s defense modernization ambitions are further constrained by the historical model of technology absorption. Reliance on licensed production and reverse engineering provided rapid capacity gains during the Cold War but proved insufficient for the complexity of modern military systems, which require integrated capabilities across materials science, avionics, engines, and system integration.
India cannot produce single-crystal turbine blades, lacks thermal barrier coatings, and requires foreign testing facilities, forcing reliance on external partners. Similarly, the RUAV-200 drone project highlighted the misalignment between political objectives and operational requirements, producing systems that failed to meet basic performance standards while serving primarily as symbolic demonstrations of technological progress. The persistent gap between political narratives and technological reality has contributed to a pattern in which policy emphasis on self-reliance often prioritizes perception over capability.
Reforms under Modi’s administration have sought to align procurement with industrial policy. Iterative updates to the Defense Procurement Procedures (2011, 2016, and 2020) increased indigenous content requirements from 30% to 60% for domestic purchases and introduced new categories such as Buy (Indian-IDDM) and Buy (Global-Manufacture in India), encouraging local design, development, and foreign investment. The 2020 procedures raised the foreign ownership cap to 74% in joint ventures, promoted strategic partnerships, and emphasized digital monitoring and transparent competition to reduce bureaucratic delays. The government aimed to leverage procurement as a tool to break DPSU monopolies, integrate private capital, and create an “India-led” defense supply chain.
Despite these policy breakthroughs, implementation has been hampered by systemic constraints. India’s R&D ecosystem suffers from a disconnect between design and operational requirements, cross-departmental blame-shifting, and weak accountability mechanisms. Projects frequently experience delays, cost overruns, or failure to meet military needs, as exemplified by the Kavir engine and Arjun tank programs.
Procurement practices reveal persistent biases, including a preference for foreign systems and specification-driven selection favoring incumbent suppliers, while the focus on cost over technical merit often disadvantages innovative private firms. Management inefficiencies exacerbate these issues: outdated production capacities, low labor productivity, quality lapses in ammunition and equipment, and ineffective oversight mechanisms all undermine the development of robust domestic capabilities.
These challenges are compounded by institutional path dependencies and entrenched interests. The DPSU-military-government complex wields disproportionate control over procurement, resource allocation, and technical evaluation, effectively insulating state-owned enterprises from market discipline and stifling private sector innovation. Subsidies, tax exemptions, and preferential long-term contracts allow DPSUs to operate at lower cost and secure guaranteed orders, while private firms face high entry barriers and limited opportunities. Strategic narratives linking state ownership to national security further reinforce this monopoly, creating normative resistance to competition and consolidating vested interests. Consequently, even reforms intended to open the defense market have struggled to alter the underlying distribution of power or foster genuine innovation.
The Modi government’s approach illustrates the tension between political imperatives and strategic rationality. Defense self-reliance has often been framed as a visible performance metric to assert India’s great power credentials, driving high-profile symbolic projects that may lack operational significance. This “false capability construction” prioritizes narrative over technological substance, creating a feedback loop in which policy and public expectations are shaped by declared achievements rather than measurable improvements in capability. Efforts to attract foreign investment and encourage private sector participation often emphasize statistical indicators of localization without establishing the institutional and technological ecosystems necessary for independent innovation. The result is a dualistic industrial structure: state-owned monopolies retain dominant positions, while private enterprises occupy peripheral, low-value niches, reinforcing dependency on external technology and perpetuating systemic inefficiencies.
India’s experience offers broader lessons for emerging economies seeking defense modernization. First, defense self-reliance cannot be reduced to numerical indicators or political symbolism; it requires a demand-driven, institutionally supported R&D and production system capable of integrating interdisciplinary innovation. Second, technological catch-up must be accompanied by structural reforms that address entrenched vested interests, establish transparent procurement mechanisms, and link accountability to performance. Third, long-term capability development must transcend short-term political cycles, prioritizing sustainable investment in complex system innovation rather than immediate political gain. Without addressing these institutional and structural constraints, policy measures risk reinforcing existing monopolies, misallocating resources, and perpetuating superficial self-reliance.
While India has achieved notable statistical progress in defense production and exports, the underlying reality reveals persistent technological dependence, systemic inefficiencies, and institutional inertia. The Modi government’s reforms represent a significant strategic attempt to modernize the defense sector, yet they remain constrained by path-dependent practices, entrenched interests, and the complexity of modern military technology. True self-reliance will require a comprehensive realignment of institutional structures, a focus on capability-driven innovation, and a recalibration of the balance between political narratives and operational effectiveness. India’s defense industry stands at a crossroads: sustaining momentum requires moving beyond symbolic achievements toward substantive technological autonomy, capable of supporting both national security and credible great power ambitions.
Source: quartz, defense news, AI jazeera, stimson center, the economic times
