Defence industry of India

The Defence industry of India is a strategically important sector in India. With strength of over 1.3 million active personnel, it is world's 3rd largest military force and has the world's largest volunteer army. The total budget sanctioned for the Indian military for the financial year 2015 is 2.47 trillion Indian rupees ($40.07 billion).

Military budget
The military budget of India is about 2.4% for year 2015 of the total GDP as per World Bank statistics. The defence expenditure for Fisical year 2017-18 allotted by Ministry of Finance is,excluding pensions a sum of 2,74,114 crores but including 86,488 crores for Defence capital.

State orders
India has been spending worth nearly $3.5 billion to boost its ageing Soviet era military equipment. It has been pushing for greater indigenisation of the military industry as India imports around 70 per cent of its defence hardware mainly from Russia, Japan Israel and United States.

Arms Exports
Although India’s track record as an arms exporter bears witness of its limited success recent defence export contract are noteworthy. In March 2011 New Delhi agreed to sell its first indigenously designed and built multi-role offshore patrol vessel (OPV) named Barracuda, to Mauritius. In March 2017, India finalised a deal with Myanmar for sale of indigenously developed lightweight torpedoes worth USD 37.9 million.Similar naval plateforms were sold to Srilanka and Vietnam as well.

Organisations
The production of Indian defence equipments prior to 2011 was completely in the hands of the Government of India. The Government of India also opened up the Foreign direct investment to 49% from the existing 26% and thereby increasing flow of funds from foreign countries. With the increase in FDI cap, private players such as companies from many developed countries will also be attracted to the Indian defence economy as they can have share in the Indian defence Companies.

Make in India
The Modi government in its first year cleared 39 capital procurement proposals, of which 32 proposals worth inr 889000000000 (or 96% of value of total proposals) were categorized as Buy (Indian) and Buy and Make (Indian)—the top two prioritized domestic industry-centric procurement categories as per the defence procurement procedure (DPP).

In July 2015, the defence ministry eased export regulations and stopped demanding multiple assurances on end-use from foreign governments even for sale of components by Indian entities.

There are several Indian SMEs that cater to the Defense industry by supplying sub-assemblies and components and providing services like system integration. Under the Make in India initiative, these organizations are set to enhance their manufacturing and development efficiency, thereby contributing to making India self-reliant in defense production. Some of the system Integrators catering to the Defense sector in India are Mistral Solutions, Alpha Designs, Astra Microwave and SLN Technologies among others.