The Indian defence sector includes all facets of the acquisition of military vehicles, weapons and other equipment, as well as plans for upgrading and modernization, and offers insights into the country's budget allocation and expenditure in the past, current and projected periods.

The army segment had the largest market share of all the segments as of 2019. The Indian Army's modernization and capacity growth are taking place at a rapid pace. In 2017, to modernise the army, the Indian government announced plans to upgrade INSAS rifles with rifles capable of firing NATO cartridges of 7.62 × 51 mm. It is also expected that the proposed procurement/upgrade of a range of air defence guns and equipment would further increase the potential of ground-based air defence. India is also in talks with the United States to acquire USD 1 billion worth of the National Advanced Surface-to-Air Missile System-II (NASAMS-II), an advanced air defence system. In November 2019, the Department of Defence signed a contract with the Ordnance Factory Board worth USD 2.8 billion to develop 464 additional major T-90s combat tanks for the Indian Army. In the years to come, such innovations, along with several other plans to modernise the armed forces of the country, will support the growth of the segment.

The Indian Department of Defence is taking several steps to help 'Make in India' in the defence manufacturing field. Via Defence Public Sector Undertakings (DPSUs) and Ordnance Factories, the Department of Defence Production (DDP) has developed wide-ranging manufacturing capacity for the production of new defence equipment. Heavy trucks, arms and ammunition, tanks, armoured vehicles, helicopters, combat aircraft, warships, submarines, missiles, electronic devices, earth moving machinery, special alloys and special-purpose steels are all manufactured goods. By promoting 'Make in India' through based, sustained, and evolved indigenization initiatives, the IAF is working towards obtaining self-sufficiency. Currently, it focuses on reducing the reliance on importing defence equipment. In the recent past, it has inducted light combat aircraft, Akash missiles, and advanced light helicopters (ALH). In the future, it also aims to induce more capable and potent LCA Mk-IA.

The Indian government launched schemes, such as the Uttar Pradesh Security Corridor, in February 2018 under the 'Make in India' initiative (UPDC). The UPDC is expected to be attracting INR 200 billion worth of investment. Protection PSUs, including the Ordnance Factory Board, have announced INR 37 billion in UPDC investments. During DEFEXPO 2020, MoUs worth INR 50 billion were signed with the state government by 23 firms. The state government has provided substantial benefits to attract developers, including reimbursement of 25 percent of the cost of land, transportation subsidies, and reimbursement of 75 percent of the cost of transfer of technology to anchor units.

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