There is a moment in every military technology programme when the excitement of invention has to give way to a much harder question. Can the soldier actually use it? And if he can, can the system be improved after it reaches the field? That is where India’s defence-industrial journey is now heading.
For years, the conversation around Aatmanirbharta in defence was understandably dominated by imports. How much can India manufacture? How many platforms can be built at home? How quickly can foreign dependence be reduced? Those questions remain relevant. But they are no longer sufficient. The next test is technology absorption.
India can now point to a significantly larger domestic defence manufacturing base. Defence production reached a record ₹1.78 lakh crore in FY2025–26, while defence exports reached ₹38,424 crore. The private sector accounted for about 24 per cent of production, its highest share so far. The numbers are encouraging. But production alone does not create technological sovereignty.
A factory can manufacture a system without necessarily possessing the deeper capability to redesign it, troubleshoot it under operational pressure, modify it for changing battlefield conditions and develop the next generation. That distinction needs to be understood.
From Transfer of Technology to Transfer of Capability
India has lived with the phrase “Transfer of Technology” for decades. Technology transfer is necessary. But it is only the beginning. The real strategic advantage comes when Indian engineers, technicians, MSMEs and start-ups can take that technology, understand its architecture, adapt it and eventually improve upon it.
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That is technology absorption.
DRDO’s current ecosystem points in this direction. Its Technology Development Fund specifically supports MSMEs and start-ups developing defence and dual-use technologies. DRDO also provides industry access to selected test facilities and maintains mechanisms for technology transfer. Its 2025 technology-transfer framework explicitly seeks wider collaboration with start-ups, MSMEs and larger enterprises.
This is an important shift. The defence industrial base cannot remain concentrated in a handful of large organisations. Modern warfare changes too quickly. A battlefield requirement may emerge today. A software patch may be required tomorrow. A sensor may need recalibration. A drone threat may require an entirely different countermeasure within months rather than years. Who responds? The answer cannot always be a large procurement cycle.
The battlefield is becoming an innovation laboratory
Recent conflicts have demonstrated a harsh reality: technology cycles in warfare are compressing. A system that appears sophisticated when inducted can become vulnerable when the adversary adapts. Drones, electronic warfare, autonomous systems, precision weapons and counter-drone technologies are moving through rapid cycles of adaptation. The lesson for India is straightforward.
The armed forces need an industrial ecosystem capable of learning at something closer to battlefield speed. That means procurement philosophy must change. Why should a company be judged only on whether it delivered the first production model? Shouldn’t the ability to upgrade, modify and improve that system also count?
That is where MSMEs and deep-tech start-ups become important. They can form a distributed innovation layer around India’s larger defence companies and public-sector institutions. India’s defence challenge is shifting from merely reducing imports to developing the capacity to “absorb, modify, scale and continuously improve” technology. This is not an argument against large platforms.
India still needs fighters, submarines, artillery, air defence systems and strategic platforms. But alongside these major programmes, we need hundreds of smaller technology companies working on sensors, algorithms, propulsion, communications, electronic warfare, robotics, materials and battlefield logistics. That is how resilience is built.
What should change in procurement?
The doctrinal shift should be from “buy and induct” to “buy, learn and evolve”. Procurement contracts should increasingly create room for iterative development. User feedback must return quickly to designers. Field formations should be connected more directly to industry and laboratories. Testing should not become merely a certification hurdle. It should become part of the innovation cycle. And successful indigenous products should not be treated as finished forever. A good military system should have a planned evolution pathway.
The Indian soldier does not fight with the technology that existed five years ago. He fights against an adversary who has had five years to study it. That difference can become decisive.
The boardroom lesson
There is also a lesson here for India’s corporate leadership. Defence technology is becoming a serious industrial ecosystem. It involves capital allocation, intellectual property, cyber security, supply-chain resilience, talent and export strategy. Boards of companies entering this sector must therefore look beyond order books. The real question is: what technological capability is being accumulated?
A company that merely assembles another company’s technology may grow rapidly. A company that understands the technology architecture can become strategically valuable. That ability will matter even more as India seeks to expand defence exports.
The next phase of Aatmanirbharta
India has already demonstrated that it can manufacture at scale. The next challenge is tougher. Can we absorb technology faster?Can we modify it faster? Can we test it faster? Can we learn from operational feedback faster?
And, most importantly, can the Indian defence-industrial ecosystem produce the next generation without having to wait for someone else to show us how? That is the real meaning of Aatmanirbharta. Not simply owning the factory. But owning the knowledge. The future Indian defence industry should therefore be judged not only by how much it produces, but by how quickly it learns. That is where strategic autonomy will ultimately be won or lost.
(This is the first part of a two-part article exploring India’s evolving defence-industrial ecosystem. The second part will follow soon.)
Colonel M V Shashidhar, Retd
Defence & Strategic Affairs Expert, Certified Independent Director (IICA), ESG Advocate and Governance Thought Leader
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