India's defence procurement policy could undergo a significant transformation in 2025. The Ministry of Defence (MoD) is considering a new reform that may prohibit the procurement of foreign license-manufactured weapons systems unless Indian firms hold the Intellectual Property (IP) rights.
This potential shift is part of a broader effort to advance the 'Aatmanirbhar Bharat' (Self-reliant India) initiative, aiming to reduce dependence on foreign defence equipment and boost domestic manufacturing.
Under current procurement guidelines, foreign weapons systems are eligible for acquisition if they have over 60% indigenous content. However, implementing this rule has been challenging due to difficulties in accurately assessing the level of local content in complex defence systems with globally sourced components.
This proposed reform signals a potential shift in the MoD's strategy. Instead of simply encouraging local manufacturing, the focus is moving towards ensuring that Indian entities control the underlying technology. This move could be announced later in 2025, possibly during major defence exhibitions or through new policy documents.
Reactions from industry stakeholders are mixed. Some domestic manufacturers welcome the potential change as an opportunity to enhance their position in the global defence market. Others express concerns about the Indian industry's readiness to assume such responsibilities. There are also questions about how existing procurement contracts would be affected by these new rules.
Despite these concerns, the MoD appears determined. Preliminary discussions suggest a framework is being considered to support Indian companies in acquiring IP or developing it independently. This could involve increased collaborative research and development between the DRDO (Defence Research and Development Organisation), academia, and the private sector, along with incentives for technology transfer.
This potential reform could have far-reaching implications for India's defence industry. If implemented effectively, it could stimulate innovation, boost domestic manufacturing, and reduce reliance on foreign suppliers. However, careful consideration must be given to ensure a smooth transition and address concerns from industry stakeholders.
