Indigenous defense industry
India had the world's second largest army. Its military budget ranked fourth in the world, higher than both United Kingdom and Germany. However, India was highly dependent on imported military equipment, especially from Soviet Union and later Russia. To reduce dependence on foreign arms, the Indian government has been pushing for indigenous development in the defense manufacturing sector. Over the years, the capital budget for defense has increased to support domestic manufacturing industries.Since 1990s, as the Soviet Union collapsed, more efforts were made to indigenize not only the production, but also the research and development (R&D) of military equipment. On one hand, there is lack of technology transfer with India’s defense imports, impeding India’s ability to develop and manufacture technically advanced equipment. On the other hand, growth in domestic demand is expected to be robust, providing incentives and opportunities to the industry. Moreover, the Foreign Direct Investment (FDI) for this sector has been increased to 74 percent, and it was opened up to 100 percent for Indian private sector.
Important defense manufacturers in India
Some of the most important Indian defense manufactures were Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and Ordnance Factory Board (OFB). HAL is one of the oldest defense manufacturers in the country. It is a state-owned company, manufacturing fighter jets, helicopters, and related parts and equipment, headquartered in Bengaluru, with R&D and production facilities spread across the country. BEL is also a state-owned company, manufacturing advanced electronics for ground and aerospace applications. It is located in Bengaluru as well, with facilities across India. However, when it comes to size, OFB was by far the largest, later corporatized into seven companies, consisting of 41 production ordnance factories, supplying Indian military from small arms to missiles and tanks.
