Maarg Manthan · Topic 21.3

Defence Indigenization and Atmanirbhar Bharat in Defence Production

Current Affairs & Government Schemes › Defence and Security Current Affairs · Topic 21.3

Defence indigenisation is the policy of the Ministry of Defence to design, develop and manufacture military equipment in India and cut dependence on imports, as part of Atmanirbhar Bharat announced in May 2020. Its main tools are Positive Indigenisation Lists that ban the import of listed items, a ring-fenced share of the capital procurement budget for domestic industry, the corporatisation of the Ordnance Factory Board into seven companies in October 2021, higher foreign direct investment limits, and the Srijan portal. As reported by the Ministry of Defence, defence production reached a record Rs 1.78 lakh crore and exports Rs 38,424 crore in 2025-26.

5 min read · UPSC Prelims · Current Affairs & Government Schemes · Defence and Security Current Affairs

At a Glance

Launch Atmanirbhar Bharat package, May 2020
Core tool Positive Indigenisation Lists of import-banned items
OFB Corporatised into seven companies, October 2021
FDI 74 percent automatic route, 100 percent by government route
Output Record Rs 1.78 lakh crore in 2025-26, as reported
Exam link UPSC Prelims, Current Affairs and Government Schemes: Defence and Security Current Affairs

Where Does It Fit?

This topic is the policy centre of the macro. The missiles, aircraft and ships in other topics are products of this drive, and the topics on iDEX, procurement rules and defence corridors are its instruments. Previous topic: Integrated Guided Missile Development Programme (IGMDP) Legacy Systems. Next topic: Innovation for Defence Excellence (iDEX) Scheme.

What Are the Main Tools of Defence Indigenisation?

Tool	What it does
Positive Indigenisation Lists	Lists of weapons, systems and components that the armed forces will buy only from Indian sources after a set date. Several lists have been issued since August 2020, covering thousands of items including sub-systems and components
Capital budget reservation	A fixed share of the modernisation budget is reserved for domestic procurement. It was set at about 75 percent in recent years
Corporatisation of OFB	The Ordnance Factory Board was split into seven defence public sector undertakings in October 2021 to improve autonomy and efficiency
FDI liberalisation	Foreign direct investment is allowed by the automatic route up to 74 percent since 2020 and beyond that through the government route
Srijan portal	Platform where public sector units list items they import so that Indian firms can offer to make them
Make procedures	Make-I gives government funding to industry for prototypes, Make-II is industry funded with an assured chance of purchase

What Are the Results and the Numbers?

Production: as reported by the Ministry of Defence in June 2026, annual defence production reached a record Rs 1.78 lakh crore in 2025-26, about 15.6 percent above the previous year
Exports: the Ministry reported record defence exports of Rs 38,424 crore in 2025-26 against Rs 23,622 crore a year earlier, with sales to more than 80 countries
Private sector: the private sector share of production was reported at about Rs 42,000 crore, while public sector units gave most of the rest
Targets: the government has stated aims of Rs 3 lakh crore of production and Rs 50,000 crore of exports by 2029, as reported
Export items: BrahMos missiles, Akash systems, artillery, patrol vessels, body armour and radars have found buyers, as reported

What Else Should You Remember?

Seven companies: the OFB successors are Munitions India, Armoured Vehicles Nigam, Advanced Weapons and Equipment India, Troop Comforts, Yantra India, India Optel and Gliders India
Older DPSUs: alongside HAL, BEL, BEML, Mazagon Dock, Garden Reach, Goa Shipyard, Hindustan Shipyard, MIDHANI and BDL, which existed before the corporatisation and make aircraft, electronics, ships, alloys and missiles
Technology funds: the Technology Development Fund supports small firms and is described in Innovation for Defence Excellence (iDEX) Scheme
Corridors: two defence industrial corridors were set up to cluster manufacturers, as in Defence Corridors (Uttar Pradesh and Tamil Nadu Defence Industrial Corridors)
Acquisition rules: the Buy (Indian-IDDM) category gets top priority, as in Defence Acquisition Procedure (DAP) and Defence Procurement Reforms
Policy document: the Defence Production and Export Promotion Policy of 2020 set the goals of higher turnover, exports and self-reliance and linked them to the lists and reforms above
Testing: a scheme for defence testing infrastructure supports private firms that lack costly test facilities
Constitutional and policy base: defence is a Union subject under the Seventh Schedule, so the Centre drives this policy
Criticism: high import share of engines, sensors and electronics persists, imports still form a large share of big platforms, and private firms face long approval times
Concerns: quality assurance, delayed payments, the risk of a few large firms dominating and the need to keep imports where technology is not available

Why Does It Matter for the Exam?

Lists: what a Positive Indigenisation List is and its effect on import
FDI: the 74 percent automatic limit and the route above it
Corporatisation: the year and the number of companies formed from the OFB
Portals: the purpose of Srijan and other platforms
Common errors: calling the lists import tariffs, or saying that FDI is capped at 49 percent now

As an analytical point, real self-reliance is measured by indigenous content in engines, sensors and electronics, and not only by assembly in India. Stable orders, timely payments and testing capacity matter more to firms than announcements.

Why Is This Topic Important?

Policy Lists, FDI and corporatisation
Numbers Production and exports
Debate Self-reliance versus imports

What Came Next?

The next topic covers the start-up and innovation route inside this policy. Next topic: Innovation for Defence Excellence (iDEX) Scheme.

Key People and Terms

PIL Positive Indigenisation List
DPSU Defence Public Sector Undertaking
IDDM Indigenously Designed, Developed and Manufactured
Make-I Government funded prototype route
Srijan Indigenisation portal
OFB Ordnance Factory Board

Exam Corner

Points to Remember

Atmanirbhar Bharat: May 2020.
OFB corporatised into seven companies: October 2021.
FDI automatic route: 74 percent.
Record production: Rs 1.78 lakh crore (2025-26, as reported).
Record exports: Rs 38,424 crore (2025-26, as reported).

Do Not Confuse With

Positive list and negative list The defence list bans import of listed items
Make-I and Make-II Government funded versus industry funded prototypes
DPSU and OFB Seven new companies came out of the older board

Memory Hook

List it, fund it, corporatise it, export it.

Mains Angle

Questions ask for an assessment of self-reliance in defence. These points give a balanced frame.

Achievements Output, exports, lists, private entry
Gaps Core technology and engines
Way ahead Testing, payments, R and D spending

A Question You May Face

An original practice question, not a past paper question.

“Examine the progress and limits of defence indigenisation in India and suggest measures to deepen self-reliance.”

How to Answer

Policy Lists, budget, FDI, OFB.
Numbers Production and exports.
Gaps Engines, sensors, delays.
Way R and D, testing, stable orders.

GS Relevance

Prelims: indigenisation lists, FDI limits, Srijan, corporatisation. GS Paper 3: defence production, industrial policy, self-reliance, exports.

Frequently Asked Questions

What is the Positive Indigenisation List in defence?

A Positive Indigenisation List names weapons, systems and components that the Ministry of Defence will no longer import after a stated date, so the armed forces must buy them from Indian sources. Several lists since August 2020 cover thousands of items, including sub-systems and parts, to build a domestic supply chain.

What happened to the Ordnance Factory Board?

In October 2021 the government dissolved the Ordnance Factory Board, a departmental body of 41 factories, and shifted its units into seven defence public sector companies. The aim was greater autonomy, better efficiency and accountability, and a stronger base to compete for domestic orders and exports.

What is the FDI limit in defence manufacturing?

The automatic route for foreign direct investment in defence was raised from 49 percent to 74 percent in 2020. Beyond 74 percent, proposals go through the government route when the technology is modern or the country gains access to advanced technology. Investors must also meet security screening rules.

What are the latest defence production and export figures?

As reported by the Ministry of Defence, defence production reached a record Rs 1.78 lakh crore in 2025-26, and exports reached a record Rs 38,424 crore against Rs 23,622 crore a year earlier. Figures are provisional and may be revised in later releases.

What is the Srijan portal?

Srijan is an online platform of the Ministry of Defence where defence public sector units and the services list items they import, so that Indian industry, including small firms and start-ups, can offer to design or make them. It supports the import substitution that the indigenisation lists require.

PYQ Practice — Statement Analysis

1 The Ordnance Factory Board was corporatised into seven companies.

True

This took place in October 2021.

2 Positive Indigenisation Lists impose higher customs duty on defence imports.

False

They ban import of listed items.

3 The automatic route for FDI in defence allows up to 74 percent.