India's Defence Economy
Making Weapons at Home
How India's self-reliance push in defence works through import bans, domestic procurement targets and higher foreign investment limits.
India has made self-reliance in defence a major goal.
Positive indigenisation lists
From 2020, the government issued lists of hundreds of items that the armed forces must buy only from domestic suppliers after set dates, from guns to radars to vehicles.
Domestic procurement share
A large and rising share of the capital procurement budget is reserved for domestic industry, around 75 percent in recent years.
Foreign investment
The limit on foreign direct investment (FDI) in defence through the automatic route was raised to 74 percent in 2020, allowing foreign firms to set up Indian ventures.
Examples of domestic products
- Tejas light combat aircraft.
- INS Vikrant, India’s first domestically built aircraft carrier, commissioned in 2022.
- Pinaka rocket systems.
- Akash missile system.
- Arjun tanks.
Challenges
- Delays and cost overruns in major projects.
- Imported components, like engines, still needed.
- Quality and reliability concerns in some products.
INS Vikrant was built at Cochin Shipyard with many Indian suppliers. While some systems were imported, most of the ship was made in India, building skills for future projects.
Many domestic weapons still rely on imported components like engines.
- India issued positive indigenisation lists from 2020.
- Around 75 percent of capital procurement is reserved for domestic industry.
- Defence FDI limits rose to 74 percent under the automatic route.
- Delays and imported components remain challenges.
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