India, a nation with one of the largest and most diverse militaries in the world, has long faced the challenge of achieving self-reliance in defence production. Despite being one of the world’s largest importers of military hardware, India has consistently worked towards reducing dependence on foreign suppliers and strengthening its indigenous defence manufacturing capabilities. Historically, India’s defence manufacturing sector has been dominated by public sector undertakings (PSUs), such as Hindustan Aeronautics Limited (HAL) and Bharat Dynamics Limited (BDL). However, in last one decade, India has decided to build clusters for Defence companies to manufacture Military hardware in India called the Defence Industrial Corridors (DICs). These would encourage private sector participation, providing opportunities for domestic players to engage in the production of defence hardware. This shift will foster greater innovation, competition, and efficiency in the sector. The introduction of DICs aligns with the government’s vision of Atmanirbhar Bharat (Self-reliant India) and transforming India into a leading global exporter of defence equipment and technology.
As globally called, building a Military–Industrial Complex (MIC) empowers a nation the ability to defend herself without making any compromise on her national interests. The freedom from dependency on imported military hardware is a significant factor that contributes to Comprehensive National Power. MIC describes the relationship between a country›s military and the Defence Industry that supplies it, seen together as a vested interest which influences public policy. A driving factor behind the relationship between the military and the defence-minded corporations is that both sides benefit—one side from obtaining weapons, and the other from being paid to supply them. As a concept, the Defence Industrial Base (DIB) is closely related to the notion of the MIC and is often discussed as a foundational element of hard power. DIB is also sometimes referred to as a defence industrial and technological base which is the network of organizations, facilities, and resources that provides a government with materials, products, and services for defence. US, China, Russia, Israel and France have very have diligently build large MICs with massive R&D support both of private sector as also of the Governments. China’s defence industrial base is operating on a wartime footing due to the Chinese government’s centralized power and decision-making that help drive whole-of-government strategies. China’s military-civil fusion (MCF) allows the state to direct university-based research to prioritized science and technology areas.
To support the growth of the Defence sector and enhance manufacturing capacity in the sector, two Defence Industrial Corridors (DICs) are being set up in India, one in Uttar Pradesh and another in Tamil Nadu. A Defence Industrial Corridor is a dedicated region or area strategically planned to promote indigenous production of defence and aerospace-related items; a pathway where domestic production of defence equipment by the public sector, private sector and Micro Small and Medium Enterprises (MSMEs) are organised to enhance the operational capability of the defence forces. While other than the DICs, India already has four industrial Corridors : Bengaluru-Mumbai Industrial Corridor (BMIC), East Coast Economic Corridor (ECEC) with Vizag-Chennai Industrial Corridor (VCIC), Odisha Economic Corridor (OEC) and Delhi-Nagpur Industrial Corridor (DNIC). Due to certain dual-use technology these industrial corridors are capable of extending their support to the Defence corridors in proximity.
The Uttar Pradesh Defence Industrial Corridor (UPDIC) focuses on the northern part of the country, connecting key cities like Aligarh, Agra, Chitrakoot, Kanpur, Lucknow, and Jhansi. The state government shall Plug and Play support with a Single Window approvals and clearances to Defence and Aerospace (D&A) manufacturing units. This shall be based on simple Procedures and rationalised regulatory regime with easy reimbursement of incentives and subsidies.
Ordnance Factories, Hindustan Aeronautics Ltd. (HAL), Bharat Electronics Limited (BEL), Bharat Dynamics Limited (BDL) and BrahMos Aerospace are the major giants which have planned investments in the state to further strengthen Defence manufacturing.
The Tamil Nadu Defence Industrial Corridor (TNDIC), located in the southern part of the country, has a strong industrial base, particularly in the automotive, aerospace, and electronics sectors. The Tamil Nadu corridor connects cities like Chennai, Coimbatore, Hosur, and Salem and Tiruchirappalli, capitalizing on the state’s existing infrastructure and manufacturing expertise. The State holds the strategic advantages with its large coastal line which has four large seaports (three government and one private) and 22 minor ports. The state has four international airports at Chennai, Coimbatore, Trichy, Madurai and two domestic airports at Tuticorin and Salem. Tamil Nadu is a power surplus state with renewable energy capacity. Other attributes such as capital city Chennai is connected to the world by three submarine cables providing a bandwidth and is also destination of choice for Korean investors; the state is the largest Recipient of Korean Foreign Direct Investment (FDI) to India. The corridor promote clusters with necessary testing and certification facilities, export facilitation centres, technology transfer facilitation, etc.
Why Are Defence Industrial Corridors Important ?
The establishment of Defence Industrial Corridors is a game-changing initiative that will significantly enhance India’s defence manufacturing capabilities. Some of the key benefits of these corridors are :-
- Boosting Indigenous Defence Production. India has traditionally been a major importer of defence equipment, with countries like Russia, the United States, and France being its largest suppliers. The corridors provide the much-needed infrastructure to set up manufacturing plants, research and development (R&D) facilities, and testing centres for a wide range of defence products, including fighter jets, tanks, submarines, missiles, and small arms.
- Creating Jobs and Economic Growth. With the establishment of DICs, a wide range of jobs will be created—from skilled labour in manufacturing plants to high-end jobs in R&D and engineering. Companies like Tata, Mahindra, L&T, and Bharat Forge have already made strides in defence manufacturing, and the corridors are expected to accelerate their growth.
- Encouraging Private Sector Participation. The Defence Industrial Corridors encourage private sector participation, providing opportunities for domestic players to engage in the production of defence hardware. This shift will foster greater innovation, competition, and efficiency in the sector.
- Fostering R&D and Technological Innovation. The corridors are designed not only for manufacturing but also for fostering cutting-edge research and development. The corridors will facilitate collaboration between defence manufacturers, academic institutions, and research organizations to create state-of-the-art technologies that can be deployed in India’s military.
- Reducing Import Dependency and Improving National Security. India’s defence import bill is one of the highest in the world, with the country spending billions of dollars annually to procure military hardware from foreign suppliers. This reliance on external sources for critical defence needs poses a national security risk, especially during times of geopolitical tensions.
- Positioning India as a Defence Exporter. According to the Ministry of Defence, India’s defence exports surged from Rs. 2,059 crore in 2017-18 to Rs. 13,000 crore in 2021-22. However, India’s defence exports are still far below their potential. By building high-quality, cost-effective defence products, India can capture a larger share of the global market for defence equipment, especially in countries that are seeking alternatives to traditional suppliers.
The Indian government has implemented several pro-business and pro-manufacturing policies in recent years:
- The Defence Acquisition Procedure (DAP) 2020. This policy framework aims to promote “Make in India” by prioritizing the procurement of indigenously developed defence systems and equipment. The DAP 2020 emphasizes the need for joint ventures, public-private partnerships, and the participation of MSMEs (Micro, Small, and Medium Enterprises) in defence manufacturing.
- The Production-Linked Incentive (PLI) Scheme. The PLI scheme aims to incentivize domestic manufacturers by offering financial incentives based on incremental sales. This scheme has been extended to the defence sector, encouraging private companies to ramp up their production capacities and invest in innovation and technology.
- Foreign Direct Investment (FDI) in Defence. The government has gradually increased the FDI limit in the defence sector, allowing up to 74% FDI under the automatic route and up to 100% FDI under the government route for advanced technologies. This move aims to bring in foreign expertise and capital, while also fostering collaboration with global defence companies.
Challenges and the Road Ahead
Challenges remain. India needs to continue investing in advanced R&D, improve its supply chain infrastructure, and build a skilled workforce to meet the growing demands of the defence sector. Additionally, the government must ensure that the corridors are equipped with the latest technology and are supported by efficient logistics and regulatory frameworks.
To truly become a global defence exporter, India will need to focus on building world-class products, ensuring quality control, and meeting international standards. Further, it will be essential to create a conducive environment for foreign collaborations, joint ventures, and technology transfers to boost India’s position in the global defence market.
ABOUT THE AUTHOR
Lt Gen PJS Pannu, PVSM, AVSM, VSM (Retd) was the former Deputy Chief Indian Integrated Defence Staff (Operations). He was responsible for raising the Defence Space and Cyber Agencies, as well as the Special Forces Division. He was head of Training of the three services in 2017, where he was responsible for writing Doctrines, making Net assessments and overseeing Premier Defence Institutions. He was the Chairman of the Executive Committee of CENJOWS and USI, premier Defence Think Tanks.