While India is pushing very hard for Atmanirbharta (self-reliance) in defence, and results are visible, it continues to face critical structural bottlenecks that limit its strategic autonomy, despite major increases in domestic production and positive indigenisation lists. India faces high-tech and core component dependencies. India remains heavily reliant on foreign imports for critical sub-systems, such as aero-engines for fighter jets (due to delays and technological gaps in projects like the Kaveri engine) and core propulsion systems for submarines. India spends roughly 0.64% of its GDP on research and development (R&D), trailing far behind global military powers like China (which spends around 2.41%), and the USA that spends 3.6% of GDP. This limits foundational innovation in niche, high-end military technologies.
Relatively inefficient Defence Public Sector Undertakings (DPSUs) still hold a massive share of production and often struggle with cost- and time-effective execution. Meanwhile, private sector participation faces steep entry barriers, high capital requirements, and fragmented market sizes.
India faces geopolitical supply chain vulnerabilities. Russia and Israel are critical suppliers, and they both are engaged in war. Ongoing reliance on legacy foreign suppliers, exemplified by delays in critical deliveries like the Russian S-400 systems, demonstrates that external conflicts can disrupt national military readiness. Also, delays in General Electric (GE) engines for critical flagship programmes such as the Light Combat Aircraft (LCA) and the Advanced Medium Combat Aircraft (AMCA) are already having cascading effects.
For long, India was looking at short wars and managing ammunition stocking accordingly. Of late, the emphasis was on readiness for swift, targeted strikes (such as Operation Sindoor) to deter terrorism from nuclear-armed neighbours. However, recent global conflicts like the Russia-Ukraine war and the never-ending conflict over Iran have prompted India’s leadership to expand preparedness for prolonged attritional wars lasting anywhere from several months up to five years.
The recent wars have indicated a huge disruptive requirement for unmanned systems and loitering munitions. These are required in very large numbers; thus, they need robust inventory management, supply-chain security, and industrial-scale and surge production capabilities.
The armed forces frequently demand specifications that are overly ambitious for the state of local industry, and thus the programmes get stalled or delayed at the 80-plus percentage maturation stage.
Even as local manufacturing expands, India remains among the world’s top arms importers, accounting for roughly 8.3% of global arms imports (SIPRI).
Current India Government Initiatives
India’s push for Atmanirbharta in defence centres on boosting domestic manufacturing, cutting down foreign imports, and scaling up local research, innovation, and defence exports. The Defence Acquisition Procedure (DAP) 2020 is constantly under revision, and the latest version is expected to be released in early 2027. A substantial portion of the defence capital acquisition budget is earmarked specifically for domestic procurement (including the Buy Indian-IDDM — Indigenously Designed, Developed and Manufactured category). Meanwhile, the Defence Procurement Manual (DPM) 2025 streamlined and digitised revenue procurement to enhance the ease of doing business for domestic suppliers.
The government has notified multiple positive indigenisation lists (PIL) covering thousands of items and subsystems across the armed forces and Defence Public Sector Undertakings, placing strict import bans on items after specific transition dates. Liberalised Foreign Direct Investment (FDI) limits in the defence sector are raised up to 74% via the automatic route for new industrial licenses, and up to 100% through government approval for projects bringing in advanced technology.
The Ordnance Factory Board (OFB) was restructured into seven new DPSUs (such as Munitions India Limited and Armoured Vehicles Nigam Limited) to improve accountability and efficiency. Dedicated Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu are actively attracting investments, building local supply chains, and integrating Micro, Small, and Medium Enterprises (MSMEs).
The Innovations for Defence Excellence (iDEX) fund was launched to support start-ups, MSMEs, and innovators working on critical defence and aerospace technologies. The Technology Development Fund (TDF) provides grants to private and public industries (with a strong focus on MSMEs) to design and build high-end military tech. The Srijan Portal allows indigenous vendors to view items designated for indigenisation, helping replace thousands of imported components.
Among the key milestones achieved are record defence production and exports. India’s total defence production reached ₹1.78 lakh crore (approx. US$ 18.6 billion) in the Financial Year (FY) 2025–26, while defence exports scaled to ₹38,424 crore (an increase of 62.66% from the previous year) reaching over 100 countries. Flagship operational and pipeline platforms include the Tejas LCA MK1A, Prachand Light Combat Helicopters, Dhanush artillery systems, the aircraft carrier INS Vikrant, and heavyweight torpedoes like Varunastra.
Distance to Go Defence Propulsion Systems
India’s defence propulsion sector faces critical, ongoing challenges that keep major military platforms heavily dependent on foreign-origin engines. For the Tejas Mk1A, Hindustan Aeronautics Limited (HAL) has faced severe delivery backlogs because GE has been slow to supply F404-GE-IN20 engines. Out of 99 engines ordered in 2021, only 14 had been delivered by late September 2026, leaving completed Tejas Mk1A airframes grounded without power-plants. Negotiations between HAL and GE for local manufacturing of the F414-GE-INS6 engine (meant for the Tejas Mk2 and AMCA) have stalled. Disagreements centre on technology-transfer scope, pricing (with unit costs reportedly rising sharply), and control over domestic production.
Sanctioned in 1989 to power indigenous fighters, the Kaveri engine project fell short of its wet thrust requirements (delivering ~70–73 kN instead of the target 81 kN). While the dry-thrust derivative has made progress for Unmanned Combat Air Vehicles (UCAVs) and completed uninstalled testing, it is still not ready to power manned fighter jets. India’s struggle stems from an immature industrial ecosystem for high-temperature metallurgy, single-crystal blade manufacturing, specialized testing facilities, and long-term R&D funding rather than a lack of engineering talent.
Efforts are shifting toward alternative tracks, including private ventures like Deep Propulse building combustor test facilities, Reliance–Rolls-Royce collaborations, and French co-development talks with Safran, though none will close the fighter propulsion gap before the early 2030s.
While India builds nuclear-powered submarines with ease, India’s ship and submarine propulsion programmes face heavy import dependence and delays, even as nuclear-powered boat development has seen steadier progress. Air-Independent Propulsion (AIP) has seen delays. The Defence Research and Development Organisation (DRDO) developed a fuel-cell-based AIP system designed to let conventional diesel-electric submarines stay submerged for weeks. While the system passed land prototype tests and the “Setting to Work Phase-2” energy module testing began at Larsen & Toubro’s facility in Hazira, Gujarat, actual integration into the Kalvari-class submarine INS Khanderi is scheduled for early 2027, with sea trials expected later that year.
Meanwhile, for surface combatants, India operates a mix of steam, diesel, and gas turbines. While it handles steam turbines and smaller diesel engines well, marine gas turbines still rely heavily on foreign core designs, hot-section materials, coatings, and advanced turbine technology. Large naval diesel engines face hurdles in power density, reliability, and local qualification. Reduction gearboxes, advanced shafting, bearings, propellers, and high-power electrical converters/drives remain heavily import-dependent.
India’s conventional submarine fleet (comprising Kalvari-class Scorpene, Shishumar-class, and Sindhugosh-class boats) is aging rapidly. Delays in the Project 75I programme and slow mid-life refit integration have prolonged the underwater capability gap.
Also, India has long struggled with foreign dependence for its main battle tank propulsion systems, most notably for the Arjun Main Battle Tank series, which relies on imported German MTU MB 838 Ka-V10 diesel engines. Production and spare parts for the German MTU engines faced severe supply-chain delays, with the manufacturer citing multi-year lead times and shifting industrial focus, and stalling the induction and overhaul of the Indian Army’s Arjun fleet. An order placed in September 2021 for 118 Arjun Mk-1A tanks with the Heavy Vehicles Factory (HVF) hit major delivery roadblocks primarily due to the unavailability of these power-packs. A large portion of older indigenous Arjun Mk-1 tanks faced serviceability issues due to foreign component shortages and maintenance backlogs.
To break this foreign dependency, India has accelerated domestic propulsion development. For the 1,500 HP Indigenous Engine (DATRAN), India conducted maiden test-firings and bench trials for its indigenously developed engine featuring a high percentage of local components, built to power future main battle tanks like the Arjun Mk-1A and future combat vehicles. Fitting the new indigenous power-pack requires re-engineering the engine bay, hull, cooling, and transmission systems, meaning these native engines must undergo extensive field evaluations before full-scale operational rollout.
India’s Status on Stealth Technology
India is rapidly expanding its sovereign capabilities in stealth technology across aerospace, naval warfare, and counter-stealth radar systems. India’s flagship stealth aircraft programme is the AMCA, a 5th-generation stealth fighter developed by the Aeronautical Development Agency (ADA) and HAL. It incorporates internal weapon bays, blended wing-body shaping, and serpentine inlets. The Cabinet Committee on Security (CCS) cleared the ~₹15,800-crore prototype development phase, with a first flight targeted around 2028 and induction following in the 2030s. The Ministry of Defence has also engaged private-sector industry partners in the manufacturing ecosystem.
The AMCA features a 25-tonne twin-engine configuration incorporating shoulder-mounted diamond-shaped trapezoidal wings, canted twin vertical stabilizers with all-moving tailplanes, and area-ruled fuselage shaping to minimize radar cross-section (RCS). The design integrates internal weapon bays to hide munitions from enemy radar, alongside advanced serpentine (S-bend) air intakes to block direct line-of-sight to the engine compressor blades. Development includes specialized indigenous radar-absorbing materials (RAM) and low-observable surface coatings, with critical RCS testing and evaluation actively underway.
It is a massive programme with futuristic technologies. The actual status of technologies will evolve when ground and flight testing of prototypes starts.
The Defence Acquisition Council (DAC) gave in-principle approval to Project 18A, a ~₹80,000-crore programme to develop a new generation of stealth-guided missile destroyers with roughly 75% indigenous content. The CCS approved a ~₹40,000-crore programme for eight next-generation stealth corvettes (displacing ~2,000 tons) to be built by Garden Reach Shipbuilders & Engineers and Goa Shipyard Limited. The Indian Navy maintains conventional and nuclear-powered stealth submarines (such as the Kalvari-class and nuclear platforms) designed for silent operations and sea denial.
IIT-Kanpur has developed indigenous stealth innovations like the Anālakṣhya Metamaterial Surface Cloaking System, a textile-based broadband metamaterial microwave absorber that offers wave absorption against Synthetic Aperture Radar (SAR) imaging and satellite/radar detection.
Rather than relying solely on offensive stealth platforms, the DRDO and its Electronics and Radar Development Establishment (LRDE) are engineering next-generation radar systems (such as Active Electronically Scanned Array (AESA) and gallium nitride/Virupaksha radar programmes) capable of tracking stealth aircraft, nano-drones, and jamming threats.
Unmanned Air, Surface and Subsurface Systems
India is rapidly expanding its domestic ecosystem of unmanned air, surface, and sub-surface systems to modernize its armed forces. India has over 600 active drone and component companies. Initially, many Indian drone companies functioned largely as “screwdriver factories” that assemble imported parts rather than building them from scratch. There has been heavy import dependence. Core components such as propulsion motors, electronic speed controllers (ESCs), GPS modules, cameras, and batteries are still widely imported from hubs like China, Taiwan, the US, Germany, and South Korea.
While some local start-ups design or assemble flight controllers in India, the essential silicon chips, ASICs, and printed circuit boards (PCBs) are predominantly sourced from overseas, mainly China or Taiwan. Critics and defence analysts note that assembling a drone domestically does not eliminate strategic vulnerability if critical navigation, communication, or propulsion sub-systems are foreign-controlled. Incidents like hacked drones along borders and supply chain price spikes have exposed these weak points.
The Indian government has banned the import of fully built foreign drones while keeping component imports open to encourage local parts manufacturing. The Buy IDDM mandate under the Defence Acquisition Procedure requires strict local content thresholds (at least 65%) and low Foreign Direct Investment caps to push companies past mere assembly. The industry is gradually transitioning toward proprietary software, domestic avionics, and home-grown propulsion systems.
India is progressing on the AURA (Autonomous Unmanned Research Aircraft) programme and Project Ghatak to develop a futuristic Indian Unmanned Strike Air Vehicle. The Indian Navy operates indigenous maritime spotter drones from frontline aircraft carriers like INS Vikrant, marking a major shift from small patrol vessels to full carrier integration. Domestic and private start-ups are building shipborne and tactical drones, complemented by high-altitude long-endurance platforms.
Pune-based Sagar Defence Engineering and other indigenous firms have developed high-speed autonomous interceptor vessels like the Matangi Unmanned Surface Vessels (USVs), equipped with 12.7mm stabilized remote-controlled gun systems, electro-optical tracking, and anti-jamming GPS. These USVs are built for harbour defence, anti-swarm operations, shallow-water patrolling, and special operations (with deployments tested in areas like Pangong Tso Lake and coastal waters).
Man-Portable Autonomous Underwater Vehicles (MP AUVs) developed by the DRDO’s Naval Science & Technological Laboratory (NSTL), these AI-driven systems feature side-scan sonars and deep-learning software to autonomously detect, classify, and map naval mines in networked swarms. India is investing in hybrid submerged drone technologies in Unmanned Launchable Underwater Aerial Vehicles (ULUAVs) that travel underwater before surfacing and converting into airborne platforms for intelligence, surveillance, and reconnaissance (ISR) while keeping the launching submarine hidden.
Clearly, this is an area of action. A lot more work is unfolding, and the private sector needs to get more into this with the latest technologies and not just “cut-and-paste” foreign systems.
India and MUM-T
India is rapidly shifting its military strategy toward Manned-Unmanned Teaming (MUM-T) across the army, navy, and air force, moving from platform-centric warfare to network-enabled operations. A Joint Doctrine & Policy Primer on MUM-T has been released, codifying how human-in-the-loop cognition integrates with autonomous systems.
EdgeForce emerged as the L1 bidder for the Indian Army’s tactical MUM-T system requirements to enhance battlefield surveillance, situational awareness, and coordination. It integrates tactical drones, Shaurya Squadrons, Divyastra, and Shaktibaan loitering munitions alongside upgraded legacy platforms like T-72 conversions.
For the Indian Air Force (IAF), the Combat Air Teaming System (CATS), led by HAL and private partners, featuring the CATS Warrior (recoverable autonomous loyal wingman), CATS Hunter kamikaze drone, ALFA swarm containers, and CATS Infinity, is a work in progress. Also being explored is a MALE UAV “mothership” concept with DRDO to deploy low-cost interceptor drones mid-flight against enemy swarms. Future twin-seat variants of the AMCA stealth fighter are being evaluated to manage loyal wingmen and sensor fusion from the rear seat.
Kolkata-based AvionX unveiled Vajra, a Naval Collaborative Combat Air Vehicle concept designed to operate alongside naval fighters via MUM-T. The LCA Navy trainer prototype is slated for MUM-T trials over the Arabian Sea to test secure communications, sensor integration, and collaborative unmanned control.
Critical Minerals and Defence Application Chips
India’s action plan for critical minerals and defence application chips centres on reducing heavy import dependencies (especially over 90% reliance on foreign sources for rare earths, gallium, germanium, and lithium) and building an indigenous value chain for aerospace, radar, missile guidance, and semiconductor electronics. The core pillars of India’s action plan are the National Critical Mineral Mission (NCMM), approved in January 202,5 with an outlay of ₹34,300 crore over seven years. The mission targets exploration, mining, midstream processing, and recycling.
The Ministry of Mines has identified 30 critical minerals (including 12 key strategic elements like gallium, germanium, lithium, cobalt, tungsten, and rare earth elements) vital for defence chips, AI hardware, and aerospace systems.
Amendments under the Mines and Minerals (Development and Regulation) Act have opened up private-sector participation and auctions for critical mineral blocks (with dozens of blocks tendered). India is actively planning and structuring a 6-month strategic reserve specifically for high-vulnerability defence minerals (such as heavy rare earths like dysprosium and terbium) to mitigate sudden export restrictions or geopolitical shocks.
Moving beyond raw extraction, the plan prioritizes domestic refining facilities, turning raw materials into battery-grade chemicals, semiconductor-grade silicon, and rare-earth permanent magnets required for precision-guided munitions, Tejas fighter jets, and BrahMos missiles. Through state-owned joint ventures like KABIL (Khanij Bidesh India Ltd.), India is securing offshore exploration and acquisition rights in Australia, Argentina, Indonesia, and African nations, alongside tech-cooperation frameworks with the US, France, and the UK.
The pace has been set, and one can see action unfolding with clarity.
How to Increase Role for the Private Sector in Defence?
Increasing the role of the private sector in India’s defence ecosystem is imperative and requires structural reforms in procurement, R&D transformation, and co-development models. It is important to shift DRDO’s role to design and technology transfer. DRDO should act primarily as a foundational research and design authority, and transfer mature technologies and prototype designs rapidly to multiple public and private manufacturers to foster competitive production (such as joint artillery or tactical vehicle programmes involving private prime contractors like Bharat Forge and Tata Advanced Systems).
There is a need to expand and simplify procurement pathways. Scale up categories like Buy Indian-IDDM and utilize “Make” routes where private firms develop prototypes with clear assurances of volume production and are guaranteed competitive orders.
Further decentralise financial powers,e rs allowing local commanders and field units to directly procure short-range items, drones, or quick-turnaround tech from domestic private innovators. Move toward a more level playing field, transparent, competitive bidding that grants private system integrators long-term order visibility rather than favouring state-owned DPSUs by default.
Increase gross R&D spend. Raise national and defence R&D expenditures (moving closer to 2% of GDP) to pull private capital into high-risk, deep-tech domains like artificial intelligence, quantum systems, aerospace materials, and robotics. Revise legacy financial audit and vigilance frameworks to tolerate calculated R&D failure, ensuring private firms and public evaluators are not penalized for experimental prototypes that do not pan out.
Scale up Innovation Schemes (iDEX and ADITI). For start-ups and MSMEs, expand grant sizes and testing infrastructure under iDEX ADITI (Accelerating Development of Innovative Technologies) to bridge the “valley of death” between initial lab prototypes and military induction. Connect private MSMEs and start-ups directly into global and domestic tier-1/tier-2 defence supply chains.
Defence Industrial Corridors should enhance plug-and-play manufacturing infrastructure, testing ranges, and localized component ecosystems in hubs like the Uttar Pradesh and Tamil Nadu Defence Industrial Corridors. Ensure regulatory streamlining by further digitising export clearances, extending industrial license validity, and easing compliance burdens for dual-use technologies.
Large private groups must invest more in R&D and build their own intellectual property.
Way Ahead India
India’s strategic autonomy, underlining the ‘nation first’ policy,y is working well and acting as a global balancer. India is emerging as a credible global producer, though it can move closer to leading international ecosystems by providing larger and faster procurement orders, patient development capital, shared testing infrastructure, and stronger integration of MSMEs into global supply chains. Many Western defence start-ups focus on emerging technologies and high-risk, high-reward domains—a domain that larger companies shy away from. There is a need to push for self-reliance, which has opened opportunities, transitioning Indian MSMEs from basic component manufacturers to high-precision co-developers in global supply chains.
The government has set ambitious strategic goals to scale the ecosystem further. The new Defence Acquisition Procedure (DAP) is in an advanced state of readiness and must be issued quickly. The defence production and export targets at ₹3 lakh crore and ₹50,000 crore by 2029 are highly achievable. Reaching this requires scaling domestic output by an additional ~₹1.22 lakh crore and exports by ~₹11,576 crore.
We need to move beyond the 24% private sector share of defence production by streamlining licensing, co-development frameworks, and leveraging MSMEs and defence start-ups via iDEX and the Technology Development Fund (TDF). Research allocations and R&D funding crossed ₹29,100 cro, re with a core focus on futuristic warfare, including AI, cyber, quantum, hypersonic/scramjet tech, and space-based assets. This needs to go up further.
Transitioning from peacetime assembly/manufacturing to building a true multi-theatre surge defence production capacity and reducing critical component bottlenecks are important. Ammunition and drones will require large inventories and surge production capabilities. The decision-making process in the security establishment bureaucracy has to be shortened. Bureaucracy currently looks more at the procedure and less at the capability. The second is much more important for national security. The defence of India requires a whole-of-nation approach.
Author: Air Marshal Anil Chopra X: @Chopsyturvey
Header Picture Credit: Representative Image Generated using AI
Twitter: @AirPowerAsia
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