Public-Private Partnerships for Strategic Self-Reliance

Public-Private Partnerships for Strategic Self-Reliance

By Leena

Introduction:

External dependence in strategic defence areas means a country’s dependence on overseas sources for key military technology, platforms, components, and expertise. For India, this has meant procurement of combat aircraft (e.g., Sukhoi-30MKI from Russia, Rafale from France), missile systems (e.g., S-400), and surveillance facilities. Although such alliances have plugged capability gaps, they have also exposed India to vulnerabilities that span supply chain disruptions, cost overruns, and strategic constraints during times of geopolitical crises. Such dependence constrains India’s ability to exercise full-spectrum deterrence. It negates its quest for strategic autonomy, particularly in a neighbourhood characterised by enduring tensions with China and Pakistan. Additionally, excessive dependence on foreign OEMs usually brings only restricted technology transfer, limiting local innovation and industrial development.

To mitigate these weaknesses, India has emphasised developing indigenous defence capabilities as part of national resilience. The Atmanirbhar Bharat Abhiyan (Self-Reliant India Mission) has initiated the process of reform in defence production, R&D, and procurement. Initiatives such as the Defence Acquisition Procedure (2020), the induction of positive indigenisation lists, and the establishment of defence industrial corridors in Uttar Pradesh and Tamil Nadu are aimed at checking import dependence and developing a robust indigenous ecosystem. Locally manufactured platforms such as Light Combat Aircraft (Tejas), Arjun MBT, and Akash missile systems are reflective of this phenomenon. In addition, defence FDI liberalisation and private sector defence expansion are transforming the defence situation in India. It is not just an economic or technical goal; fostering local capability is a strategic necessity that not only augments India’s long-term security and technology sovereignty, but also its international standing.

Concept and Evolution of Public-Private Partnerships (PPP)

The Concept of Defence PPPs

A Public-Private Partnership (PPP) in India’s defence sector is a formal, long-term contractual agreement between a government entity (like the Ministry of Defence, Defence Public Sector Undertakings (DPSUs), or the Armed Forces) and one or more private sector companies.

Unlike traditional procurement, where the government simply buys a finished product, a PPP involves shared responsibility, risk, and reward. The core idea is to leverage the private sector’s efficiency, innovation, and capital, and combine it with the public sector’s experience, long-term perspective, and strategic control.

Key features include:

• Risk Sharing: Both the public and private partners share the financial, technical, and operational risks associated with a project.
• Leveraging Expertise: The model combines the private sector’s managerial and technological agility with the public sector’s vast domain experience in defence.
• Lifecycle Focus: Many PPPs cover the entire lifecycle of a product or service, from design and development to production, maintenance, and upgrades.
• Goal Alignment: The partnership is structured to achieve a common, strategic objective, such as developing a new weapon system or achieving self-reliance in a critical technology.

Common models include the ‘Make’ categories (part of the Defence Acquisition Procedure) and the Strategic Partnership (SP) model, which aims to create a long-term industrial ecosystem for specific complex platforms like submarines and fighter aircraft.

The Evolution of Private Sector Participation

The journey from a state-dominated defence industry to a collaborative PPP model has been gradual but accelerating.

Phase 1: The Pre-2001 Era

• State Monopoly: India’s defence production was almost exclusively reserved for Defence Public Sector Undertakings (DPSUs) and the Ordnance Factory Board (OFB).
• Limited Private Role: The private sector was limited to being a low-level supplier of raw materials, components, and parts.

Phase 2: Opening the Doors (2001-2014)

• 2001 Watershed: The defence sector was opened to 100% Indian private sector participation for the first time, with Foreign Direct Investment (FDI) capped at 26%.
• Kelkar Committee (2005): This committee provided a comprehensive framework for increasing private sector participation, formally recommending PPPs and highlighting the need for the private sector to move from supplier to partner.
• Initial ‘Make’ Procedures: The first ‘Make’ procedures were introduced, attempting to fund private sector R&D, but progress remained slow.

 

 

Phase 3: The ‘Aatmanirbhar Bharat’ Push (2014-Present)

• “Make in India” (2014): This initiative provided a major policy thrust, identifying defence manufacturing as a key focus area.
• Defence Acquisition Procedure (DAP): Successive updates to the DAP (formerly DPP) have prioritised indigenous design, development, and manufacturing. It introduced categories like ‘Buy (Indian-IDDM)’ (Indigenously Designed, Developed and Manufactured) as the top priority.
• Strategic Partnership (SP) Model (2017): A landmark policy to create long-term partnerships with Indian private firms to build major platforms like submarines, fighter jets, helicopters, and armoured vehicles in collaboration with foreign OEMs.
• Liberalised FDI: The FDI policy was progressively relaxed, now allowing 74% via the automatic route and up to 100% via the government route for access to modern technology.
• iDEX (Innovations for Defence Excellence): Launched to create an ecosystem for fostering innovation and technology development by engaging startups, MSMEs, and academia.
• Defence Industrial Corridors (DICs): Established in Uttar Pradesh and Tamil Nadu to create a concentrated industrial base for defence manufacturing.
• Corporatisation of OFB (2021): The 41 Ordnance Factories were dissolved and restructured into seven new DPSUs to improve efficiency, accountability, and competitiveness, further opening up space for private collaboration.

This evolution has shown concrete results, with the private sector’s contribution to defence production reaching a record 22.56% in FY 2024-25 and defence exports surging to all-time highs.

Strategic Importance of PPP in Reducing Import Reliance

Enhancing Indigenous Production Capacity

Public-Private Partnerships (PPPs) are pivotal in transforming India’s defence sector from an import-dependent ecosystem into a self-sustaining industrial base. Historically, India has been one of the world’s largest arms importers, with over 60–70% of its defence needs sourced externally. This reliance created vulnerabilities in supply chains, technology access, and operational readiness. PPPs directly address these gaps by mobilising private sector capital, innovation, and efficiency to complement the state’s strategic oversight.

Through PPP frameworks, private firms collaborate with Defence Public Sector Undertakings (DPSUs) and the Defence Research and Development Organisation (DRDO) to co-develop and manufacture advanced platforms. For instance:

• Tejas Light Combat Aircraft (LCA): HAL partnered with private suppliers for avionics, composites, and subsystems.
• Pinaka Multi-Barrel Rocket Launcher: Developed by DRDO with production support from private firms like Tata Power SED and L&T.
• Akash Missile System: Joint production involving Bharat Electronics Limited (BEL) and private vendors.

Defence industrial corridors in Tamil Nadu and Uttar Pradesh further institutionalise PPPs by clustering MSMEs, startups, and large firms around shared infrastructure, thereby multiplying indigenous capacity. These corridors are designed to create a defence manufacturing ecosystem that can scale production, reduce costs, and foster innovation.

Promoting Self-Reliance and Atmanirbhar Bharat

PPP frameworks are central to India’s Atmanirbhar Bharat vision, which emphasises strategic autonomy and resilience. By reducing dependence on imports, PPPs enable India to maintain operational readiness even during global supply chain disruptions or geopolitical crises.

Key policy instruments reinforcing PPP-led self-reliance include:

• Positive Indigenisation Lists: Over 500 defence items have been banned from import, compelling domestic production through PPPs.
• Strategic Partnership (SP) Model: Select Indian firms act as system integrators in collaboration with foreign OEMs, ensuring technology transfer while building domestic supply chains.
• iDEX (Innovations for Defence Excellence): Encourages startups and MSMEs to innovate in niche technologies, often in PPP mode.
• Make-II Projects: Promote industry-led design and development with government support.

These initiatives not only reduce external dependence but also position India as a global defence exporter, with defence exports crossing USD 2 billion in 2024–25. PPPs thus serve as the bridge between policy intent and industrial execution, aligning economic growth with strategic sovereignty.

 

Strategic Outcomes

• Resilience: PPPs ensure uninterrupted access to critical systems by embedding production capacity within national borders.
• Innovation Ecosystem: By involving startups, MSMEs, and academia, PPPs foster dual-use technologies that spill over into civilian sectors.
• Global Positioning: India’s growing defence exports, supported by PPP-driven production, enhance its role as a security provider in the Indo-Pacific.
• Economic Growth: Defence PPPs generate employment, attract FDI, and stimulate ancillary industries, making defence a growth engine.

Conclusion:

Public-Private Partnership (PPP) have emerged as a cornerstone of India’s defence modernisation strategy, enabling the country to transition from heavy import dependence to building indigenous capacity. By combining the agility and innovation of private firms with the resources and strategic oversight of the public sector, PPPs accelerate the development of advanced defence platforms and infrastructure. Initiatives such as the Strategic Partnership (SP) Model under the Defence Acquisition Procedure institutionalise PPPs by designating Indian firms as system integrators in collaboration with foreign OEMs, ensuring technology transfer while embedding domestic supply chains. Defence industrial corridors in Tamil Nadu and Uttar Pradesh further strengthen this ecosystem by clustering MSMEs, startups, and large firms around shared infrastructure, thereby multiplying indigenous production capacity and innovation.

Aligned with the vision of Atmanirbhar Bharat, PPP frameworks are central to promoting self-reliance and strategic autonomy. Polices such as positive indigenisation lists, which ban imports of hundreds of defence items, compel domestic production through PPP-led collaborations. Schemes like Idex and Make-II projects foster innovations by connecting startups, MSMEs, and academicians with the defence forces, while DRDO’s technology transfer to private firms embeds R&D capacity within national borders. These measures not only reduce external dependence but also position India as a global exporter of defence technologies, ensuring resilience against supply chain shocks and enhancing India’s role as a security provider in the Indo-Pacific.

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