India's Push for Self-Reliance in Defence: What It Means for Businesses and Partners

For decades, India found itself in an uncomfortable position — one of the world's largest military spenders, yet heavily reliant on foreign suppliers for the equipment its armed forces depended on. Fighter jets, submarines, artillery systems, helicopters: a significant portion of what India's defence forces used came from abroad. The strategic and economic consequences of this dependence were hard to ignore. Every major procurement deal meant billions of dollars flowing out of the country, limited technology absorption at home, and a nagging vulnerability that came with relying on external suppliers for critical national security assets.

That picture has been changing, and quite deliberately so. Over the past several years, the Government of India has made indigenous defence manufacturing a cornerstone of national policy. The logic is straightforward: a country of India's size, ambition, and security requirements cannot remain a perpetual importer of defence technology. It must build the industrial and technological capacity to defend itself on its own terms.

The Policy Shift That Changed Everything

The most significant structural change came through the Defence Acquisition Procedure 2020, commonly known as DAP 2020. Before this, defence procurement in India operated under frameworks that, while functional, did not place enough weight on building domestic capability. DAP 2020 changed that by embedding indigenisation directly into how the government buys defence equipment.

The procurement categories under DAP 2020 tell the story clearly. The highest priority goes to equipment that is indigenously designed, developed, and manufactured by Indian companies. Below that sits a category for Indian-manufactured goods, followed by arrangements where global vendors manufacture in India, and only at the bottom of the list does purely imported equipment feature. This hierarchy is not accidental — it is a deliberate signal to both domestic and foreign industry about where India wants its defence sector to go.

Complementing DAP 2020 is the broader Atmanirbhar Bharat Abhiyan, or the Self-Reliant India initiative, which Prime Minister Narendra Modi launched in 2020. In the defence context, this has translated into import embargo lists for hundreds of pieces of equipment, ring-fenced budgets for domestic procurement, and faster clearances for private sector companies looking to enter the defence space. The message from New Delhi has been consistent: India's defence market is open, but access to it increasingly requires a commitment to building things here.

What This Means for Foreign Companies

For foreign defence companies, this shift has been both an opportunity and a challenge. India remains one of the most attractive defence markets in the world — large, growing, and with requirements spanning every domain of modern warfare. But the days of simply winning a contract and exporting finished equipment to India are largely over.

To participate meaningfully in Indian defence procurement today, foreign companies need Indian partners. They need to share technology, set up local manufacturing, and commit to building domestic supply chains. This is not always comfortable. Technology transfer involves intellectual property considerations, export control compliance, and the genuine commercial risk of sharing hard-won know-how with partners who could, in theory, become competitors one day.

Yet many global defence majors have concluded that the alternative — staying out of the Indian market or remaining marginal players — is worse. Companies from the United States, France, Israel, and Russia have all deepened their local partnerships in recent years, recognising that India's indigenisation push is not a passing phase but a permanent feature of how this market will operate.

The Strategic Partnership Model

One of the more innovative features of DAP 2020 is the Strategic Partnership model. Recognising that building domestic capability in complex platforms like fighter aircraft, submarines, helicopters, and armoured vehicles requires more than just good intentions, the government created a structured framework for deep industrial collaboration.

Under this model, a small number of Indian companies are designated as strategic partners in specific segments. These companies then tie up with foreign original equipment manufacturers to jointly produce platforms in India. The foreign partner brings the technology and global manufacturing expertise; the Indian partner provides the local industrial base, supply chain integration, and long-term sustainability.

For Indian companies selected as strategic partners, this is a transformational opportunity. It gives them access to cutting-edge global technology and the chance to build genuine world-class manufacturing capability. But it also comes with serious obligations — investment commitments, quality standards, and the responsibility of delivering on complex, long-duration defence contracts.

For foreign companies, the Strategic Partnership model offers a cleaner, more structured entry into India's defence market than ad hoc joint ventures. But it demands real commitment: genuine technology sharing, sustained investment, and a willingness to treat the Indian partner as a serious long-term collaborator rather than just a compliance mechanism.

The Challenges No One Should Underestimate

None of this is simple. India's defence procurement process is multi-layered, and timelines can stretch considerably. Indigenous content requirements demand careful attention to supply chains — sourcing the right components locally at the right quality and cost is not always easy in a defence industrial ecosystem that is still maturing. Licensing, security clearances, and foreign investment rules add further layers of complexity.

For Indian private sector companies, the challenge is equally real. Meeting global defence standards requires investment in quality systems, governance structures, and compliance frameworks that many companies are still building. The opportunity is enormous, but so is the bar that must be cleared to seize it.

The Bigger Picture

What India is attempting is genuinely ambitious. Building a world-class domestic defence industry from a base of significant import dependence takes time, capital, political will, and industrial discipline. The government has provided the policy architecture. The question now is whether industry — Indian and foreign — can execute against it.

For those willing to engage seriously with India's indigenisation agenda, the rewards are substantial: access to a large and growing market, long-term supply and support contracts, and a role in shaping one of the most significant defence industrial buildouts of the coming decade. For those who approach it as a box-ticking exercise, the results are likely to be disappointing.

India has made its direction clear. The companies that will thrive here are the ones that take that direction seriously