The agenda of making India a defence manufacturing hub has been complemented by the strategic engagement in technology transfer agreements. MAKE procedure, more specifically MAKE-III, facilitates manufacturing in India through Transfer of Technology (ToT) from Foreign Original Equipment Manufacturers (OEMs). Though the number of MAKE-III projects undertaken- they have become important avenues through which India would acquire advanced defence technologies and cultivate indigenous capabilities. Also, the stipulation of minimum 60 percent indigenous content makes a significant step towards building self-reliance.
India recently showcased its growing indigenous capability in defence manufacturing through a contract for Advanced Towed Artillery Gun System (ATAGS) procurement under the category of Buy Indian-Indigenously Designed, Developed, and Manufactured. Therefore, it reflects the success of indigenous initiative in a vital segment of defence industry. While this has not been a classical technology transfer deal, it exhibits India’s growing ability to produce advanced weaponry through its own R&D efforts.
An important illustration of a successful technology transfer in the aerospace field is the collaboration between the TATA Aircraft Complex and Airbus for manufacturing C295 Aircraft. This project is a giant boost to India’s capability in military aircraft manufacturing with a thrust towards involvement of the private sector. In regards to manufacturing technology transfer, not entirely, the wet lease of Flight Refuelling Aircraft from Metrea Management for the training of Air Force and Navy pilots involves the transfer of critical operational knowledge and skills that complement the enhancement of India’s defence capability.
India’s strategy for enhancing defence manufacturing is two-pronged: one is to promote indigenous design and development (IDDM) for self-reliance in areas where India possesses accidental expertise; the other is to harness ToT deals strategically to plug gaps in critical technologies. This way, India will slowly get rid of reliance on foreign sources while developing a strong and technologically sound indigenous defence industry.
The Innovations for Defence Excellence (iDEX) initiative is very important for fostering a vibrant ecosystem for defence innovation in India. iDEX provides grants and facilitates the development of cutting-edge technologies for defence along with other MSMEs, startups, individual innovators, R&D institutions, and academia. The launch of the ADITI scheme under this, focusing on critical and strategic technologies like satellite communication, advanced cyber technology, and autonomous weapons, demonstrates the government’s commitment to the advancement of technology in the defence sector.
India is well on its way to becoming a hub that is emerging in a very short time as a significant center for defence manufacturing and technology transfer. It has shown impressive growth in production and exports of defence items supported by strategic technology-transfer agreements and the facilitating initiatives of various defence industrial corridors, coupled with iDEX-all of which is paving the way towards self-reliance and making India a major player in the international defence market.
1. Benefits for India: Economic and Strategic Gains
The Economic Survey of the country expects the emerging industrial sector to grow at 6.2% during FY-25, thus significantly contributing to the overall GDP growth of India. The real IIP growth rate is 4%, but the promise of 6.2% growth indicates the great importance of the economy—the meaning and implications for this sector cannot be underemphasized. Analysts say it will make the sector the second-largest in the economy after services. Experts have showered pockets of bright prospects over hope and bright projections, suggesting that Indian manufacturing can achieve an unbelievable $1 trillion by 2025-26. It indicates the massive scale of economic impact anticipated from its continued expansion.
The manufacturing ecosystem not only contributes directly to the GDP but is also one of the very large engines for job creation and skill development throughout the length and breadth of the country. With various skill sets, from factory floor workers to highly skilled engineers and technicians, the manufacturing activity creates jobs on the very large scale under the flagship initiatives of Make in India and Atmanirbharta. The government has also proactively promoted many skill development programs that aim to develop the population to support the growth and modernization of the manufacturing sector.
Additionally, India gains economically through this phenomenal increase in defence exports. Defence exports expected to reach ₹23,622 crores in FY 2024-25 offer substantial foreign exchange earnings and enhance India’s image as a trustworthy and competitive supplier in foreign markets. The government’s target for USD 50,000 crore for exports by 2029 clearly demonstrates the sector’s immense expected future economic potential.
There is a need for a technology transfer agreement between India and another nation because these agreements will contribute very greatly to the improvement of technology and the promotion of innovation in the manufacturing sector in India. These contracts help countries acquire advanced manufacturing technologies, specialized knowledge, and very advanced technologies. Access to these advances has the potential to fast-track development cycles in India and improve the quality and sophistication of products manufactured and to make the ecosystem for innovation even stronger. A steadily increasing number of patent filings in India indicates that the intellectual property environment is getting stronger and that the country is becoming not only capable of absorbing technology but also quite able to creatively innovate.
Strategically, the push for self-reliance in defence under the Atmanirbhar initiative is quite strong in making the country’s national security robust, as well as enhancing its strategic autonomy. Through the reliance on domestic suppliers for critical defence equipment, India minimizes vulnerability to geopolitical pressures and assures a more secure and dependent posture. The well nurtured indigenization in defence technologies and platforms could further enhance the country’s capabilities and flexibility in tailoring equipment to specific operational needs and strategic requirements.
To cut the long story short, India’s emergence as a manufacturing hub especially for defence-related sectors will generate huge economic gains: it will contribute to GDP, create jobs, and finally, increase the exports exponentially. This change also brings with it certain strategic advantages by way of spurring technological capabilities, innovation, and enhancing the national security framework through self-reliance in production.
2. Why Other Countries Are Choosing Indian-Made Systems
With all the stars aligned, global purchasers are finding compelling reasons to turn to India for their defences.
- Cost-Effective Quality
- Indian systems offer world-class capability at a fraction of Western costs.
- For developing nations, Indian artillery, drones, radars, and small arms present high performance without budget overruns.
- The fact that Indian-made boots are now part of the Russian Army’s gear along with the growing global acceptance of Indian defence products just speaks volumes about the quality and reliability of Indian manufacturing.
- Fast Enlistment and Customization
- Indian makers do deliver a shorter timeline for manufacture, having a willingness to customize platforms according to the need of buyers — a stay of flexibility of the Western OEM under their conventions.
- Technology Partnership Approach
- However, being on the user’s query is India getting technology transfer, there exist incidences where the technology might flow from India into other countries.
- In stark contrast to some exporters who are very rigid on end usage and service clauses, India follows a partnership model.
- Capacity-building support
- Onsite training
- Joint production options (seen in cases with Vietnam or the Philippines)
- For example, the potential for India to serve as an export hub for the Carl-Gustaf M4 Recoilless Rifle from Saab, with India itself manufacturing said system, is a nice illustration. This shows that India is not just a net beneficiary but also a potential provider of advanced defence manufacturing capabilities.
- Diversifying Away from Big Powers
- India offers countries an important alternative for reducing dependence on a very few suppliers and thereby furthering their strategic autonomy in defence procurement
3. Challenges and the Way Forward:
Despite considerable advances made in sectors of manufacturing in India, with defence included, major challenges persist, affecting the sustained growth and global competitiveness of Indian manufacturing industries. There has been a positive trend observed in industrial growth; however, it has slowed down in FY 2024-25, emphasizing the need for more, to be done for manufacturing to significantly contribute to the GDP of the country.
Among others, it is crucial to rectify cost disabilities and shore up infrastructural gaps related to logistics and transportation to increase competitiveness. India still interestingly experiences such an unusual import dependence for certain critical defence technologies: hence, we would require more efforts toward indigenous development and strategic acquisition of technology. We would also have to ensure that we bring the private sector into the fold on a large scale as we tackle export promotion alongside measures to simplify the complex export licensing and end-user verification framework; and to very effectively counter well-entrenched global arms exporters.
Some of the possible recommendations to strengthen manufacturing capabilities further and export competitiveness are considered below:
- There needs to be a greater focus on Research and Development (R&D) and innovation to enable India to move away from purely assembly-based manufacturing towards higher-value design and development.
- By reducing the regulatory burden, eliminating unnecessary red tape, and ensuring policy stability, we will create a more fertile environment for the growth of manufacturing. We should provide targeted incentives coupled with full support to MSMEs as they constitute the largest share of the manufacturing ecosystem and would help unleash their growth potential.
- We require investment and development for skill development programs to ensure a workforce prepared for the constant challenges of advanced manufacturing technologies.
- In the defence sector, we can further simplify export procedures, and we can financially aid exporters in order to meet the ambitious export targets.
It needs to be approached strategically if one is to derive maximum benefits from technology transfer agreements for India and the international partners. Paramount in ToT agreements must be securing know-how in manufacturing, together with know-why in design and development. Joint ventures and alliances for technology development and production should be encouraged so that partners can exchange knowledge and resources. Resourcing of India’s indigenous R&D capacity must, therefore, continue so that it can absorb acquired technologies and advance further technology development through transfer. Finally, it is binding to ensure that the transfer agreements directly contribute to realizing advances in India’s manufacturing sector by setting up clearly established guidelines and mechanisms, as well as institutional bodies relevant to the effective transfer of technology and its deployment.
4. Conclusion:
India has made remarkable and commendable strides in its search for transforming into a dominant global manufacturing hub, more so within the strategically important defence sector. However, this entire metamorphosis has greatly been brought about because of the utmost dedication shown for the Atmanirbhar initiative on the part of the Government, and the nefarious utilization of technology transfer agreements.
These reciprocal arrangements have thus led to rapid economic development, job creation, and a much-needed elevation of India’s technological prowess. At the same time, other nations have benefited from cheap yet high-quality products and technologies emanating from India, thereby helping in the diversification of global defence supply chains. Acknowledging the impediments still existing, continued endeavours and inherent future potential offer the promise that India emerges as a major and influential player in the global manufacturing ecosystem, contributing not only to its own sustained development but also to the larger canvas of international security and cooperation.
