Protecting The Core: The Strategic Case For Indigenous Defence Manufacturing

The ladder of preference in the extant DAP is not mere bureaucracy - it is a deliberate, staged pathway from dependence to autonomy.

There are various stages to it:

• Buy Indian: Indigenously designed and developed, with over 60 per cent indigenous content on cost.
• Buy Indian – Product: Indian vendor, potentially not designed in India, but with at least 50 per cent indigenous content.
• Buy and Make Indian: Initial import of fully formed equipment, followed by domestic manufacture and technology transfer, with at least 50 per cent indigenous content.
• Buy Global and Manufacture in India: Foreign collaboration that culminates in local manufacturing with 50 per cent indigenous content.
• Buy Global: Outright purchase and procurement of foreign equipment.

Recognising 100 per cent foreign-owned subsidiaries as Indian vendors threatens to collapse this ladder into a single rung. A parent company’s foreign IP and governance can, in practice, steer technology, design decisions, and capture value away from the existing benefit to Indian companies. The private sector, India’s most potent engine of renewal and innovation, could see its incentives diluted, its risk capital diverted, and its indigenous capabilities eroded. This would reverse Atmanirbhar Bharat from a capability-building creed into a mere procurement slogan.

India's Defence Expenditure

Data points underscore the stakes. India’s defence expenditure remains among the world’s largest in emerging markets. The Defence Ministry reports tens of billions of dollars in annual procurement, with a growing emphasis on domestic content and capability-building. While foreign collaboration remains essential to fill gaps, it must not come at the expense of genuine domestic ownership. A 2023 study by the Indian defence ecosystem highlighted that ownership and control are not merely legal formalities; they determine accountability, long-run R&D investment, and the ability to tailor technology to India’s security environment.

The Society of Indian Defence Manufacturers (SIDM) has pointedly stated that equating foreign-owned firms with indigenous manufacturers risks diluting Make in India’s core objective. It could also tilt the field in favour of foreign entities, crowding out genuine Indian champions who build capacity from the ground up. SIDM’s position aligns with many retired officials and defence scholars who caution that sovereignty hinges on domestic ownership, governance, and the ability to absorb and adapt critical technologies.

The Global Perspective

Global comparators offer instructive guardrails. The US maintains a robust defence-industrial base through domestic-content rules, export controls, and targeted incentives that prioritise national security over quick market access. Israel’s defence ecosystem — where government, military, and industry work in tight coordination — emphasises indigenous development, rapid technology absorption, and tightly secured supply chains. These models show that strategic autonomy is not protectionism; it is prudent governance that ensures deterrence credibility and enduring innovation.

What, then, should a prudent revised DAP look like? A governance framework that rewards genuine indigenisation and meaningful collaboration could include:

Ownership and control criteria: more than 50% Indian ownership, with majority board representation and explicit oversight on IP and technology transfer. A “control” clause should ensure decision-making authority rests with Indian entities.

• Verifiable indigenous content: a credible threshold of 60%+ indigenous content on cost, with independent third-party verification and periodic audits to deter gaming.
• Structured technology transfers: time-bound, milestone-driven transfers that culminate in domestic design, development, and manufacturing of critical components, along with domestic testing facilities.
• Accountability and audits: regular, transparent reviews of “Indian Vendor” claims to ensure value addition occurs within India, with public dashboards on compliance.
• Incentivised capacity-building: explicit triggers for joint ventures that include local supplier development, R&D investments, and the creation of Indian IP streams.

The Atmanirbhar Bharat mission is a strategic compass—not a slogan. It envisions a defence industry that is self-reliant, innovative, and resilient. A robust indigenous base is a force multiplier for science and technology; it radiates into civilian sectors — materials science, propulsion, cyber, and advanced manufacturing — while reducing exposure to geopolitical shocks.

Calibrated Collaboration

Public policy must not only deter overreach but also encourage calibrated collaboration. A healthy ecosystem can absorb foreign technology through well-structured partnerships that commit to long-term local value addition, joint R&D, and robust IP agreements that ensure India benefits from shared innovations.

The imperative is clear: preserve and strengthen the ladder to indigenisation. The revision of the DAP offers a chance to set rules that foster true domestic capability, not paper labels. If India can design governance that ties Indian vendor status to genuine ownership and capability-building, we will secure sovereign capability, spur private-sector growth, and position India as a credible, high-technology defence power.

As policymakers start preparing to roll out the revised DAP, the central question remains: do we want a ladder that truly elevates Indian firms, or a staircase that shortcuts ownership and erodes sovereignty? The answer should be the former. Sovereignty wins when ownership and control stay in Indian hands, when governance is transparent, and when the nation relentlessly pursues indigenous capability while engaging global partners on firm, value-creating terms.

(The writer is the president, Chintan Research Foundation. Views are personal.)