In light of global trends characterized by so-called 'militarized interdependence,' there is an urgent need for countries like India to ensure their security and sovereignty by achieving self-sufficiency in the production of necessary goods.
In his recent address, US Treasury Secretary Scott Bessent put forward three principles: a nation unable to produce what it needs is not truly secure; a nation dependent on adversaries in critical aspects does not possess true sovereignty; and a nation that reduces its economy to consumption cannot be considered prosperous.
This new world order, where markets are subject to unexpected disruptions and alliances can be ignored, poses serious challenges for a middle power like India. The question arises whether India, following the spirit of Atmanirbharata, can achieve independence by producing everything necessary, as suggested by Bessent.
It is necessary to examine which major military platforms and technologies are currently imported and how to avoid dependence on others in critical areas, even if great powers do not do so. A particular difficulty is the country's reliance on oil imports (90 percent) and gas (half of its needs).
Evidently, in such a world, the goal must go beyond simple economic efficiency and competitiveness, including minimizing vulnerabilities, although localization often entails increased costs and reduced competitiveness. This is why attempts are being made to domestically produce chips and create data centers.
Asymmetric conflicts in Ukraine and Iran raise urgent questions for the economy. The question arises whether India can develop such a production base given its limited manufacturing capacity, or if repurposing civilian industrial enterprises for military needs would be more sensible.
The conflict in Ukraine showed that territorial acquisition is not a viable goal, casting doubt on traditional approaches to military power that require large defense budgets. Furthermore, it has become clear that modern wars are fought in cyberspace, requiring the definition of necessary capabilities.
Prudent policy can offer solutions. For example, India could become an energy state, similar to China's example, to reduce dependence on oil and increase storage capacity to protect against supply shocks. China stores oil reserves for over four months, whereas India's strategic reserves are calculated for only 10 days.
India has always been cautious about international dependence, especially in defense, space, and nuclear sectors, striving for national capabilities and self-reliance. There have been impressive achievements in the defense sector, such as nuclear submarines (although Russian assistance was critical) and a multi-layered missile program. The air defense system demonstrated its capabilities during Operation Sindhur. Mobile artillery guns were developed in partnership with Kalyani and Tata.
The risk is that excessive ambition may lead to failure or disproportionate delays. This explains why many attempts at self-sufficiency in the defense sector have failed, making the country the second-largest importer of weapons in the world (after Ukraine). Many necessary platforms are still purchased from abroad.
The list of urgent procurements includes 114 Rafale multi-role aircraft from Dassault Aviation worth about $28 billion, six conventional submarines from ThyssenKrupp for approximately $8 billion, and an expected delivery of 31 heavy high-altitude MQ-9B drones from General Atomics for $3.5 billion. These high prices relate to weaponry that will arrive over several years, but it should be noted that India's total defense budget this year is only $23 billion. Imported weapons are generally significantly more expensive than domestic counterparts when they are developed.
Moreover, the world periodically reminds us of supply problems. Gas turbine engines powering the fleet's main warships traditionally came from Ukraine, which is now involved in the war; fortunately, Bharat Heavy Electricals manufactures gas turbines for advanced warships. However, supplies of S-400 air defense systems were interrupted due to Russia's commitments. Hindustan Aeronautics cannot produce the 180 Tejas fighters urgently needed by the Air Force because the engines must come from General Electric, which delayed production because a component supplier from South Korea went bankrupt.
Dependence on imports is due to the fact that too many plans, goals, and objectives have failed to materialize. The dependence on General Electric engines for Tejas is linked to the fact that the domestic Kaveri engine did not meet the requirements, but Tejas also had other issues, such as missile firing and radar integration. The army's requirements for a rifle (e.g., interchangeable barrels using different caliber ammunition) proved too complex to implement, leading to large-scale imports, but not of rifles with interchangeable barrels.
The NavIC system (Navigation with Indian constellation), which was supposed to be a regional replacement for American GPS (Global Positioning System), is not functioning due to a lack of operational satellites and the failure of atomic clocks, despite more than a quarter of a century since Kargil 1999.
Indeed, it resembles the old cry of a kingdom for a horse, as destroyers are commissioned without towed sonar arrays, and submarines patrol underwater without heavy torpedoes. Claims of indigenous development sometimes blocked imports or led to international suppliers being blacklisted (bribery appears to be an integral part of the defense industry), resulting in the fleet receiving neither imported nor domestic replacements.
The critical need is realism about what the country can reasonably achieve on its own (and provide at cost and on time) while remaining part of international consortia where that is impossible. For instance, it would be better if India remained a partner in Russia's Su-57 stealth fighter program, especially now that China has developed its own J-20 stealth fighter.
A positive aspect is that policy changes can improve past results. Targets have been set to increase the share of domestic supplies in defense equipment procurement. The private sector has been invited to participate in the arms business, and foreign investment rules have been liberalized, allowing 74 percent foreign ownership through the automatic route. State research laboratories are encouraged to seek production partners in the private sector, and startups receive funding through the IDEX (Innovators for Defence Excellence) program launched in 2018.
The results are quite noticeable. Domestic defense production has quadrupled in the last 12 years, reaching 1.78 trillion rupees, with the private sector contributing one-quarter of the total. Adjusted for inflation, real production has likely doubled. Defense exports have grown faster, from almost zero to 38,300 crore rupees. The ratio of defense exports to imports is now better than ever, at about 1:2, although it is acknowledged that import assessment is difficult because even domestic manufacturers rely on imported components.
Nevertheless, the largest suppliers remain traditional state sector players. This is expected given their long experience and established capabilities. Three Indian companies in the global top 100 defense producers are state-owned: Hindustan Aeronautics, Bharat Electronics, and Mazagon Dock Shipbuilders. Other public sector undertakings remain critically important players, such as Bharat Dynamics for the missile program, while Bharat Heavy Electricals manufactures marine gas turbines to replace old Ukrainian suppliers.
However, the situation is no longer exclusively governmental. Larsen & Toubro has invested in an ambitious ship design center, as well as two shipyards. Tata is collaborating with Airbus to assemble the C295 transport aircraft. Godrej is focused on the complex task of developing aircraft engines. Kalyani handles artillery guns, and the navy funds Kirloskar for the production of marine diesel engines.
The critical hurdle to overcome is the transition from licensed production based on foreign blueprints and critical components (which limits autonomy) to developing indigenous military platforms. HAL has assembled hundreds of Sukhoi fighters but cannot build one independently, unlike its Chinese counterparts who transitioned from Soviet cooperation to independent development. This is why the Tejas program was so important, and HAL's inability to produce the aircraft ordered by the Air Force led to a severe shortage of fighter squadrons. This failure may explain why the company was not shortlisted for producing advanced medium-range combat aircraft; three private consortia are competing. They lack prior experience and will have to depend on international partners. It remains unclear whether this will lead to genuine indigenous capability, especially considering that significant investment will be required in research and development, which has always been a weakness of Indian industry.
Most countries that have established defense industries have done so based on a broad industrial base supported by technological strengths. India is an exception because its manufacturing sector is weak, and research and development is strictly limited to a few sectors, with almost none having a private sector presence. The share of manufacturing in GDP remains about the same as three or four decades ago, and the products are mostly not advanced. Software service providers had a 30 percent profit margin but still did not invest in artificial intelligence, which now threatens their core business.