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OPINION AUGUST 25, 2023 | The Indian Eye 12

the capital acquisition budget for the
year 2023–24 (more than Rs 100,000
crores) for domestic procurement, as
against Rs 85,000 crores in 2022–23.
As a result of these steps, not only
has foreign procurement reduced
in recent times (from 46 per cent in
2018–19 to 36 per cent in 2020–21),
the value of domestic defense pro-
duction has also risen (to more than
Rs 100,000 crore in 2022–23), while
there has been a significant rise in de-
fense exports as well (Rs 16,000 crore
in 2022–23).
India has ambitious plans to be-
come part of the global defense sup-
ply chains. The 2020 Draft Defense
Production and Export Promotion
Policy laid out a vision for the Indian
defense industry to reach a turnover
of Rs 175,000 crores by 2025, with ex-
ports amounting to Rs 35,000 crores.
While the country is on course to
achieve these ambitious targets, there
is a need to take steps to reinforce de-
fense supply chains and mitigate vul- India’s defense supply chain, like many others around the world, faces a range of vulnerabilities that has a direct impact on defense prepared-
nerabilities. ness and operational efficiency of its armed forces (File photo)
A critical component of the de-
fense supply chain are the MSMEs
which require governmental support.
The Ministry of Defense has taken
significant steps for promoting the
role of the MSMEs in the defense
sector, including encouraging defense
innovation by startups, earmarking
orders up to Rs 100 crore exclusively
to domestic MSMEs, modifying off-
set guidelines to ensure integration of
MSMEs in the global defense supply
chain, among others.
Given the key role of innovation
in maintaining competitive edge,
partnerships like INDUS-X between
the US and Indian defense startups
can be expected to add value and de-
liver critical edge to Indian defense
manufacturing, as indeed efforts like
the Strategic Partnership model that
encourage foreign OEMs to set up
domestic manufacturing units for crit-
ical platforms.
The path to supply chain resil-
ience and self-reliance is not without
challenges. Transitioning from a for-
eign dependent supply chain model
to a more self-reliant one requires
careful planning, policy reforms and Indian private defense industry and startups require governmental hand-holding to become players of some reckoning in the global supply chain
huge investment. The government
will have to walk the fine line to bal-
ance the advantages of international private defense industry and startups Rajneesh Singh is Research Fellow at
trade and collaboration with the need require governmental hand-holding
for domestic production capabilities. to become players of some reckon- the Manohar Parrikar Institute for Defense Studies and Analyses, New Delhi
It requires a collaborative approach ing in the global supply chain. This Views expressed are of the author and do not necessarily reflect the views of the
involving government agencies, in- will require industry-friendly policies Manohar Parrikar IDSA or of the Government of India.
dustry stakeholders and academia. which support Indian players and al-
Domestic manufacturing, espe- low them to survive and flourish in ex- This article first appeared in the Comments section of
cially by private industry, is driven by treme environment of cut-throat com- the website (www.idsa.in) of Manohar Parrikar Institute for Defense Studies and
commercial considerations. Indian petition in the global supply chain. Analyses, New Delhi on August 14, 2023

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