How The Indian Defence Sector Plans to Tackle Global Supply Chain Hassles | Profit Exclusive

As global supply chain disruptions continue to impact defence timelines, India's Ministry of Defence is pivoting sharply toward self-reliance to safeguard production and fulfilment. Defence Secretary Rajesh Kumar Singh, in an exclusive interview with NDTV Profit, outlined how India plans to insulate its defence sector from external shocks through localisation and visibility for vendors.

"Our defence production timelines have suffered, whether it's delays in S-400 deliveries or disruptions in GE 404 engine supplies, which pushed back Tejas fighter jet schedules by two years," Singh said.

In response, the government has rolled out measures to build a robust domestic supply chain. Singh said the services have been granted emergency procurement powers for quick replenishment of ammunition and critical equipment. Over the longer term, the ministry plans to close capability gaps by accelerating contract finalisation and vendor onboarding, especially in areas like radars, precision-guided munitions, and military-grade drones.

A key plank of India's supply chain strategy is giving long-term visibility to vendors. "When we place large orders with Hindustan Aeronautics or Bharat Electronics, their entire supplier network gains confidence," Singh said, adding that HAL alone currently has an order book spanning six years. "The downstream component and sub-assembly makers know that orders are coming."

The Defence Ministry is also ensuring procurement certainty by projecting continuity in capital contracts. "Next year too, we'll sign at least Rs 2 lakh crore worth of contracts. That assurance gives suppliers the confidence to invest in capacity and equipment," Singh said. He emphasised that practically all projects, from AMCA development to shipbuilding, are being put through competitive bidding, creating a level playing field and real pricing for private players.

Singh pointed to India's evolving procurement frameworks, like Buy (Indian), Buy and Make (Indian), and IDDM (Indigenously Designed, Developed and Manufactured), that now prioritise local value addition. "Imports now require special Defence Acquisition Council approval. They are no longer the default," he said. Just a few years ago, 65% of defence procurement was import-driven. But in fiscal 2024, 81% of contracts worth Rs 2.09 lakh crore went to domestic manufacturers.

That shift has transformed India's defence supply chain structure, not just for domestic fulfilment but also for export-led opportunities. "Public and private players are now both generating export orders. And we're seeing double-digit growth in value of sales for many companies," Singh said.

However, Singh was candid about existing gaps in critical capabilities. "India needs to be a drone superpower. But our ecosystem is still largely limited to non-military grade platforms," he said, noting that only a few firms, with or without foreign tie-ups, have near-term potential.

Building resilient defence supply chains, Singh noted, will also require deeper investments in R&D. "You better have a full-scale engineering department and you better have capital equipment on your shop floor. If you don't have either and you are here to make a fast buck, this industry is not for you. Here, we want you to invest for the long road."