Ministry of Defence’s Declare 2025 as a ‘Year of Reforms’

Recently, The Ministry of Defence (MoD) decided to observe 2025 as the ‘Year of Reforms’

• Aim: To transform the Armed Forces into a technologically-advanced combat-ready force capable of multi-domain integrated operations. 

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Key Focus Areas Identified for Reform

• Strengthen Jointness and Integration: Focus reforms on enhancing joint operations and integration initiatives, facilitating the establishment of Integrated Theatre Commands.
• Embrace Emerging Domains and Technologies: Prioritize advancements in domains like Cyber and Space, while harnessing technologies such as Artificial Intelligence, Machine Learning, Hypersonics, and Robotics. Foster Inter-Service Cooperation: Promote a shared understanding of operational requirements and joint capabilities through coordinated inter-service training and collaboration.
• Streamline Acquisition Processes: Simplify and expedite acquisition procedures to ensure timely and effective capability development.
• Promote Technology Transfer and Public-Private Partnerships: Encourage collaboration between the defence sector and civil industries by enabling smoother technology transfer and fostering public-private partnerships.
• Enhance Stakeholder Collaboration: Break down silos within the defence ecosystem, improve civil-military coordination, eliminate inefficiencies, and optimize resource utilization.
• Position India as a Defence Exporter: Establish India as a reliable exporter of defence products by fostering R&D and forging partnerships with foreign Original Equipment Manufacturers for knowledge exchange and resource integration.
• Focus on Veteran Welfare: Optimize welfare measures for veterans while leveraging their experience and expertise.
• Instil Cultural Pride and Global Standards: Cultivate pride in Indian culture and achievements, building confidence in meeting global standards through indigenous capabilities while adopting suitable best practices from modern militaries.

Structure of India’s Defence System

• President: Supreme Commander of the Armed Forces.
• Parliament: Authorizes defense expenditure and oversees military policies.
• Ministry of Defence: Manages and administers the armed forces.
• DRDO (Defence Research and Development Organisation): Conducts defense research and development.
• CDS (Chief of Defence Staff): Provides single-point military advice to the government.
• Indian Army: Land-based combat forces.
• Indian Navy: Naval operations and maritime security.
• Indian Air Force: Air and space power.

Status of India’s Defence Sector (2024)

• Defence Budget: Total allocation of  ₹6,21,941 crore for 2024-25, comprising 13% of total government expenditure. Focus Areas of the current budget year are modernization, personnel welfare, and research & development.
• Global Rankings: Ranked 4th globally in Global Firepower Index 2024.
• Active Personnel: 1.49 million, with 1.17 million in reserve forces.

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Defence Production and Trade

• Turnover: Reached ₹1,087 billion (US$13.5 billion) in 2022-23.
• Exports: Surged to ₹210.83 billion (US$2.63 billion) in 2023-24, a 21-fold increase over the last decade. 
  • Export saw a shift towards exporting critical systems like missiles(Brahmos) , warships, and radars.
• Key Export Destinations: Southeast Asia, Africa, and Middle Eastern countries.
• Imports: Primarily sourced from Russia, France, Israel and the U.S.
  • As per SIPRI recent report , between 2019 and 2023, the biggest defense exporter to India was Russia, with 36 percent of the period’s total defense import. It was followed by France with 33 percent.
• Foreign Direct Investment (FDI): 
• • Policy: FDI cap raised to 74% (automatic route) and up to 100% (government route) for high-tech defence projects.
  • Impact: Encouraged global partnerships with OEMs and advanced technology transfer.

Evolution of Defence Reforms in India

• Post-Independence Era (1947-1961)
  • Democratic Civilian Control: Civilian authority was firmly established through governance frameworks, ensuring democratic oversight of the armed forces.
  • Challenges: Heavy reliance on imports and limited domestic defence capabilities marked this period.
• Reorganization After 1962 War Structural Adjustments: Strengthened geographical commands and operational frameworks to enhance military readiness and response capabilities.
• Kargil War Reforms (1999-2001): Establishment of the Defence Intelligence Agency( 2002), tri-service commands, and Integrated Defence Staff to improve coordination, intelligence sharing, and joint operations.

Decade of New Age Reforms (2014-2024)

• CDS and DMA: Streamlined Service Coordination: The creation of the Chief of Defence Staff (CDS) and the Department of Military Affairs (DMA) in 2019 marked a significant step in fostering inter-service synergy.
  • The CDS, as a single-point military advisor, ensures unified strategies across the Army, Navy, and Air Force, while the DMA focuses on streamlining decision-making and boosting indigenous capabilities.
• Agnipath Scheme: Launched in 2022, the Agnipath Scheme introduced short-term recruitment of “Agniveers” to rejuvenate the armed forces.
  • It reduces long-term personnel costs while maintaining a youthful and skilled force, aligning HR practices with modern operational needs.
• Integrated Battle Groups (IBGs): IBGs are compact, mission-specific units capable of swift deployment and independent operations. Designed for agility and efficiency, they enhance the armed forces’ ability to respond to modern threats.
• DAP 2020: The Defence Acquisition Procedure (DAP) 2020 emphasizes self-reliance by banning the import of select items, boosting private sector involvement, and mandating high indigenous content in procurement.
• Ordnance Factories Grouped into DPSUs: In 2021, 41 ordnance factories were restructured into seven Defence Public Sector Undertakings (DPSUs) to improve autonomy, efficiency, and accountability.
  • These DPSUs specialize in diverse areas such as munitions, vehicles, and military-grade equipment, enhancing India’s indigenous manufacturing capabilities.
• Improved Role of the Private Sector: Liberalisation of defence production in 2001 catalyzed private sector growth.
  • Key players like Tata Group, L&T, and Mahindra now contribute significantly to transport aircraft, artillery systems, and missile technologies.
• Focus on Indigenous Capabilities
  • Major Indigenous Projects: Key achievements include the HTT-40 trainer aircraft, light combat helicopters, advanced radars, and warships.
  • Positive Indigenisation Lists: Over 500 defence items have been banned from imports to encourage domestic manufacturing, fostering self-reliance.
• Role of iDEX in Innovation
  • Promoting Startups: The Innovations for Defence Excellence (iDEX) initiative has engaged startups and MSMEs to innovate for defence needs.
  • Support for R&D: Encouraged innovation in critical domains like AI, robotics, and hypersonics to align with modern warfare requirements.
• Defence Space Agency: Established in 2019 with an objective to secure national strategic objectives in space and integrate space capabilities into military operations.

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Need for Reforms in the Defence Sector

• Dependence on Imports: India remains one of the largest arms importers, accounting for 9.8% of global imports (2019-23). 
  • Over 58% of defence procurement relies on foreign firms, highlighting the need for indigenous manufacturing to reduce dependency.
• New Age Security Threats: Emerging challenges like cyber warfare, space-based threats, and drones demand modernization of technologies, such as AI and quantum communication. China’s advancements in civil-military fusion further necessitate reforms.
• Logistic Challenges: Inefficiencies in supply chains impact operational readiness. For instance, during the 2020 Galwan clash, delays in delivering essential equipment exposed logistical gaps.
• Low Defence Budget: India’s defence budget for FY 2024-25 is $76 billion, significantly lower than the U.S. ($877 billion) and China ($292 billion), restricting modernization and R&D investments.
• Delays in Procurement: Bureaucratic processes often delay acquisitions, such as the Rafale deal, finalized after years of negotiations, impacting combat preparedness.
• Delays in Appointments: The absence of a Chief of Defence Staff (CDS) for nearly 10 months post-Gen Bipin Rawat’s demise hampered reforms.
• Personnel Living Conditions: Many soldiers face subpar living facilities, especially in high-altitude regions like Ladakh, affecting morale.
• Veterans’ Issues: Delayed pensions and limited job opportunities post-retirement highlight gaps in welfare schemes for ex-servicemen.

Challenges in Bringing Reforms to the Defence Sector

• Fiscal Burden: Limited budgetary allocations strain the ability to modernize infrastructure, scale domestic production, and invest in cutting-edge technology while balancing operational costs.
• Lack of Innovation: Insufficient focus on advanced R&D and dependency on foreign technologies hinder the development of indigenous critical components and high-tech equipment.
• Hurdles in Procurement: Bureaucratic red tape and inefficiencies in the defence acquisition process lead to delays in decision-making, production, and deployment of essential systems.
• Resistance to Reforms: Political opposition and inter-service disagreements, such as concerns over integrated theatre commands (ITCs), slow the implementation of crucial structural changes.
• Export Limitations: Defence PSUs struggle to compete internationally, while the private sector largely exports components instead of complete systems, limiting India’s global market footprint.
• Emerging Technology Adoption: Challenges in integrating new technologies like AI, 5G/6G, and quantum systems require robust policies and significant investments to remain competitive globally.
• Low Private Sector Participation: Although , the share of the private sector has significantly increased in recent years but it is still only 22% of India’s total defence sector production in FY 2024.

Key Government Initiatives to Boost Defence Production

Way Forward for Defence Reforms

• Boost Indigenous Manufacturing: Strengthen Make in India initiatives by expanding the Positive Indigenisation List and fostering PPPs.
  • Programs like iDEX are a welcome step in this direction.
• Streamline Procurement: Implement a faster Defence Acquisition Procedure (DAP) to address bureaucratic delays.
  • Develop digital platforms for real-time tracking and approvals.
• Enhance Budget Allocation: Gradually increase the defence budget to bridge gaps in modernization and R&D.
  • Focus on critical areas like AI, hypersonics, and quantum technologies.
• Strengthen Veterans’ Welfare: Optimize pension schemes and provide reskilling opportunities for post-retirement careers.
  • Enhance living conditions, especially in high-altitude regions.
• Modernize Training and Integration: Expedite the creation of Integrated Theatre Commands for joint operational efficiency.
  • Incorporate emerging tech like AI and robotics into training modules.
• Implementation of Committees Report: By complete implementation of Raksha Mantri Committee report 2022, many of the issues regarding jointness, modernisation , litigation and Grievance redressal ,etc  can be addressed .

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Conclusion

India’s declaration of 2025 as the ‘Year of Reforms’ signals a renewed commitment to transforming its defence sector. By addressing longstanding challenges and embracing innovation, the government aims to achieve self-reliance and global competitiveness. Through these reforms, India is poised to not only safeguard its security but also assert its position as a key player in the global defence ecosystem.