Trusted Interdependence: India's next step in defence self-reliance

The Modi government's defence industrial strategy has evolved through distinct phases.

From 2014, defence industrial corridors were set up, and licensing norms simplified, under 'Make in India' to build local capacities. FDI limits were raised from 26% to 49% under the automatic route to encourage global defence manufacturers to invest in India.

From 2020, under 'Aatmanirbharta', imports were discouraged, positive indigenisation lists drawn up to protect domestic industry, and procurement policies increasingly favoured indigenously designed, developed and manufactured military equipment from Indian companies.


Minimum indigenous content requirements also replaced defence offsets. At the same time, FDI limits were again raised from 49% to 74% to encourage foreign defence firms to transfer technologies into their majority-owned and controlled JVs in India.

Revised Defence Acquisition Procedure 2026 is awaiting MoD approvals. The focus is on critical technologies to be 'owned by India'. Future acquisitions are expected to place greater emphasis on Indian ownership of IP and system controls, whether by Indian-owned entities or through collaboration with friendly foreign countries under G2G frameworks.

This evolution in defence industrial strategy reflects ambition and realism. India has proved it can indigenously design and build increasingly sophisticated military platforms, from nuclear-powered nuclear-missile submarines (Arihant-class) and an aircraft carrier (INS Vikrant), to 4th-gen LCA (Tejas) and advanced artillery guns (ATAGS).

The private sector is being drawn into the design of future conventional attack submarines (Project-76), while leading Indian firms have been shortlisted to compete in the development of the 5th- gen multi-role stealth Advanced Medium Combat Aircraft (Amca). Yet, significant technological gaps persist.

Engines for battle aircraft, battleships and battle tanks continue to rely on foreign tech. These are capabilities that can't be acquired through protectionist policies or procurement preferences, but only through collaborative co-development. Among the most consequential is the Indo-French partnership to co-develop a next-gen jet engine for Amca. The Safran offer under a G2G structure reportedly includes full tech transfer, including for the most critical hot sections of the engine, and joint IP.

Equally important, the tech is expected to be International Traffic in Arms Regulations (ITAR)-free, with no US export controls. Safran is also co-developing helicopter engines for next-gen Indian Multi-Role Helicopter (IMRH) and its naval variant.

Meanwhile, Britain's Rolls-Royce has reiterated its offer to co-develop Amca jet engine, and reportedly proposed full tech transfer with Indian IP. While the offer enjoys support from London, absence of a formal India-Britain G2G agreement isn't helpful.

Discussions are also ongoing with Britain to collaborate on marine engines for future Indian Navy platforms. Rolls- Royce has proposed to co-design, co- create and co-produce electric-powered engines, initially for landing platform docks (LPDs), and potentially for next-gen destroyers and future frigates.

India and Britain have announced their intent to negotiate a bilateral inter-governmental agreement (IGA) for this. But Rolls-Royce's restrictions within MoD, which limit it to operational support on existing platforms, may make such collaborations more complicated.

The US, too, appears increasingly willing to deepen defence industrial collaboration with India. Pete Hegseth recently mentioned co-production of US Javelin anti-tank guided missile (ATGM). Although not strictly a co-development programme, its success most likely lies in whether Indian Inc can independently maintain, upgrade and develop future variants of the system.

New Delhi seeks maximum technology transfer, minimum export controls, high levels of indigenous content and meaningful IP rights in its defence collaborations. But there are limits to what foreign partners are likely to offer. Advanced deftech remains closely guarded national assets. Foreign firms are unlikely to part with their most sensitive 'gold box' technologies.

Success of India's emerging defence industrial strategy will ultimately depend on a delicate balancing act. New Delhi should remain a key partner with foreign governments and defence manufacturers, using one of the world's largest defence markets, expanding industrial base, and increasingly integrated supply chains to build mutual dependencies. At the same time, it must aggressively pursue greater access to critical technologies, IP and system controls. Achieving both won't be easy. But if managed well, trusted interdependence may offer the most practical path to self-reliance in defence yet.