India Struggles to Modernize Defense Industry

India under Prime Minister Narendra Modi is trying to execute two highly ambitious programs: modernizing its military while also increasing the relative weight of domestic military production. These are both critical goals, but in the short term they often come into conflict, forcing India to choose between buying the most appropriate systems and waiting years until it can build equivalents at home. India has attempted to cut this knot by introducing reforms aimed at making the country more attractive to foreign defense manufacturers while stimulating domestic industry, but these have so far failed to lure capital on a large scale. For the foreseeable future, India will likely continue to juggle these competing priorities, making acquisition-by-acquisition decisions on whether to favor military readiness or its manufacturing base.

India is not just one of the world’s top arms importers: it is number one, spending $11 billion more on defense imports in 2010-16 than Saudi Arabia, the second-highest importer. Building a defense manufacturing base that will allow it to reduce its reliance on imports thus has high strategic and emotional valence for Indian policymakers. And it fits well with Modi’s flagship ‘Make in India’ initiative, launched in September 2014 to encourage foreign companies to pick India as a manufacturing destination. Ideally, India will eventually not just make its own defense products, it will manufacture for other markets as well.