Defence manufacturing witnesses rise in participation of private companies

In recent years, there has been a notable transformation in the landscape of defence manufacturing, with an increasing emphasis on the involvement of private companies. Traditionally, the defence manufacturing sector has been dominated by government-owned entities. However, it is now experiencing a paradigm shift as private companies play a more significant role in the design, development and production. According to ICRA, there is an anticipated compound annual growth rate of about 20 per cent for defence production by private companies in the upcoming three years. The goal is to reach Rs 34,000 crores by the fiscal year 2026.

What is leading to this shift?

The government’s emphasis on the pursuit of efficiency and innovation is one of the primary drivers behind this shift. Private defence manufacturers operate in a more market-driven environment, incentivising them to optimise processes, reduce costs, and deliver high-quality products. Some of the private companies such as Alpha Design Technologies, Apollo Micro Systems, Centum Electronics, Data Patterns, Megha Engineering and Infrastructures Limited, UKB Electronics Pvt. Ltd and Tata Power SED, have obtained approval within the quality verification scheme for products supplied to the Indian armed forces. 

The Indian government recently initiated the development of two Defence industrial corridors, located in Uttar Pradesh and Tamil Nadu. Additionally, they launched the indigenisation portal (SRIJAN), facilitating interaction among stakeholders and private vendors. This portal enables Indian vendors to identify items within their capabilities, reducing the necessity for imports.

According to Manoj Tayal, Managing Director, UKB Electronic, the integration of private companies into defence manufacturing has also proven beneficial in addressing the challenges of rapid technological advancements. 

“As India strides towards Atmanirbhar Bharat and the Make in India campaigns, we embark on a transformative journey in defence revitalisation. Drawing inspiration from nations that embraced a comparable model, our success hinges on embracing core competencies, rapid capacity building, streamlined procedures, assured orders for Indian firms, a level playing field, shared long-term vision, robust infrastructure, collective efforts, responsible policies, and unwavering confidence in Indian products. We look forward towards more streamlined solutions by the government to boost the industry,” Tayal added.

The collaboration between public and private entities brings forth innovation, efficiency, and a more competitive landscape. However, careful consideration and oversight are essential to mitigate potential risks and ensure that national security interests remain paramount.