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HISTORY OF THE INDIAN DEFENCE INDUSTRY




The goal of self-reliance has driven India to nurture and extend its industrial defence base since independence. In 1947, much of the facilities and supplies for security in India was inherited by her old colonial colony, Britain. India concentrated during the 1950s on its ability to manufacture machinery with little technological know-how on an indigenous basis, leaving the sophisticated equipment specifications to be tackled by imports. The amended Industrial Policy Resolution reserved the arms and weapons market for the public sector in 1956. The ordnance factories established under British rule in 1958 were the core community of industries that established the Defence Research and Development Organisation (DRDO).


As the nation encountered dramatic reverses in its dispute with China in 1962, the impetus for India's defence industry arrived. This led India to increase its defence budget from 1.5 percent of the gross domestic product (GDP) of the nation to 2.3 percent. A restriction imposed by the United States of America on the sale of weapons to India following India's war with Pakistan in 1965 celebrated a period of security relations with the Soviet Union. Over the next 15 years, the Soviet Union delivered the lion's share of India's security equipment. The nation obtained advanced weapons and also started the manufacture of equipment, although by licence. By investing largely in DRDO and developing native missile systems such as 'Prithvi',' Akash' and 'Nag' in the 1980s, India began a renewed effort to galvanise its domestic defence industry. During this period, India also began the development of its flagship aeronautical project, the Light Combat Aircraft. India entered into an agreement with the Soviet Union in 1998 to develop through a joint venture a supersonic cruise missile system, the 'Brahmos'.


India opened its doors to liberalisation and progressive economic reforms towards the onset of the 21st century. The era of state-run businesses and a centrally planned economy fell out of favor and opened the path for the private sector's arrival. Total access to the defence industry was given to the private sector. The establishment of the Defence Procurement Policy 2006 of the 'Make' type of procurement enabled the industry to develop and manufacture advanced defence equipment, with government commitment to provide 80% of the cost of development. In the defence sector, FDI of 26 percent was also allowed. The government, however, continued to rely on the importation of advanced weapons, with the introduction of new fighter aircraft such as the Sukhoi 30 MKI into the air force, the purchase of nuclear subs and missile destroyers for the navy and the purchase of howitzers such as the BOFORS system for the military.

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