With a vision to revolutionize the defense sector the then Defense Minister & Prime Minister Smt. Indira Gandhi established Defense Exhibition Organization in 1981 with the first defense exhibition in 1999 (this was one among the primordial attempts in the era of globalization).

The main objective of the Defense Expo event is:-

To gain the attention of global investors in the Indian defense sector by exhibiting military potential, and
To popularize Indian military equipments globally and simultaneously pool financial resources to boost local manufacturing.

Simultaneously, the Defense procurement procedure / Defense Acquisition Procedure (DAP) was introduced in 1992 and amended in 2002 following the aftermath of the Kargil War (1999), it was mainly intended to modernize the Indian armed forces by:-

Promoting local manufacturing of defense equipments, and
Introducing FDI into defense.

Defense Expo and Defense Acquisition Procedure symbiosis

The initial DAP of 1992 had no records to permit FDI into the defense sector, but following the first defense exhibition in 1999 and the successful maiden test of the Brahmos missile in 2001 acted as an instigator to MoD to consider FDI into the defense sector.

Brahmos missile was the first of its kind overseas cooperation between the Defense Research and Development Organization (DRDO) and the Russian Federation’s NPO Mashinostroyeniya (NPOM) initiated in 1998 and successful in 2001.

This allowed 100% participation to domestic players, and based on the recommendation of the Group of Ministers (to reform the National Security System) up to 26% of FDI was approved, and,
Subsequently, the Department for Promotion of Industry and Internal Trade and the Ministry of Commerce and Industry 2014 extended it up to 49% through the Government’s Foreign Investment Promotion Board (FIPB) route and above 49% through the Cabinet Committee on Security (CCS) on a case-to-case basis, with provision for up to 100% (foreign ownership for modern technologies).
In 2020 the share of FDI was further increased up to 74% directly and 100% through the government route.

Defense Expo and Defense Acquisition Procedure: the catalyst behind "Make in India" — Image Source – Q-Tech Synergy

The increase in FDI is significantly attributable to the role of Defense Exhibitions in drawing the interest of foreign investors into the Indian defense sector.

Performance records: Defense expo & DAP

Every revision of DAP (in 2006, 2008, 2013, 2016, 2020) facilitated exports and improved the private sector participation, particularly following the 2016 update, the share of the private sector has gradually increased.

This performance has enabled India to progress as a global defense manufacturing hub and increased its exports, and particularly the private sectors are outperforming the public and Government sectors in exports.

By Oct 2021, India’s defense exports (for 75 countries) had risen by 334%.

The list of indigenization of various military equipments are as follows:-

LCA Tejas – India + UK + USA + Israel + Russia.
Brahmos – India + Russia.
T-90 Battle tanks – India + Russia.
Akash Surface to Air Missile – India + Russia.
ALH Helicopter – India + US.
LRSAM – India + Israel.

Further, with a vision to make India self-reliant by 2025 Government has been increasing defense allocation in the budget (parallel to the implementation of DAP).

The reality behind defense imports

To date, India has been regarded as the world’s top defense importer, mainly due to a lack of native manufacturing (but on the other hand other nations like the US, China, and Russia are purchasing more weapons from their domestic players rather than importing from other nations, therefore on a bigger view they purchase more weapons than India does).

Therefore, to avoid imports the recently MoD has been blacklisting several imports and has recently blacklisted 107 equipments (which were imported from Russia), and Indian defense expenditure has increased by 76% compared to the 9% global average.

Can we have schemes like contractual employment in defense sector to reduce revenue expenditure?