By Aniket Dharamshi • Arvind Ananthanarayanan • Vishrut Bubna
From legacy importer to global defence contender — India’s push towards self-reliance and high-tech manufacturing
India’s defence sector is undergoing a strategic shift—shedding its import-heavy past and stepping confidently into a future driven by self-reliance, innovation, and private sector agility. At the heart of this transformation is the Defence Acquisition Procedure (DAP) 2020, which mandated an increase in domestic content in Indian weapon systems and mandated the procurement of Indian systems. The emphasis remains on Indian designed, developed and manufactured (IDDM) systems.
This also allowed the Defence Public Sector Undertaking companies (DPSU) to emerge as lead integrators. The private sector companies catering to defence then aligned with the DPSUs requirements to create a tiered eco-system. Post DAP-2020, the Indian defence eco-system has the DPSUs as lead integrators with systems, sub-systems and components provided by the private sector.
The arrival of orders and consequent growth ensured that the DPSUs turned into growth stars. However, the growth opportunity has not benefitted all private sector participants equally. Most private sector participants suffer from elongated working capital cycles, and poor return ratios. In this sector deep dive, we discuss the evolution of the Indian defence sector and distil the qualities of winning companies. The growth of export opportunities is also expected to benefit companies with an innovation capability. A multi-billion-dollar growth journey has just started for the Indian defence sector.
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