Why India's defence-industrial ecosystem remains in the State's hands

The country has one of the largest defence-industrial bases in the developing world: 16 DPSUs, over 430 licensed companies, about 16,000 micro, small, and medium enterprises, and 46 DRDO labs

2 min read

Updated On: Aug 26 2025 | 6:14 PM IST

Aabhas Sharma

Credit: ADR

Dozens of wheeled self-propelled artillery systems stood ready for export at Bharat Forge’s Pune factory last year. While they weren’t on the Indian Army’s shopping list, another was: The 155-millimetre 52-calibre Advanced Towed Artillery Gun System (ATAGS), developed by the Defence Research and Development Organisation (DRDO) with Bharat Forge subsidiary Kalyani Strategic Systems Ltd (KSSL) and Tata Advanced Systems Ltd (TASL). The first shot was fired in 2016. Yet the gun had no domestic order by summer 2024, despite extensive trials and an initial government nod for 307 guns in March 2023.

KSSL’s leadership was still confident the ATAGS’ journey would end in success. And it did with the March 26 Ministry of Defence (MoD) contract worth around ~6,900 crore with KSSL and TASL — the first-ever deal for such indigenous howitzers.

Two days later, Hindustan Aeronautics Ltd (HAL) was awarded contracts for 156 Prachand light combat helicopters — the largest order ever secured by the public-Sector aerospace firm. While both deals marked progress for ‘Aatmanirbharta’, they also highlighted the contract value gap between defence public-sector undertakings (DPSUs) and private firms.

The Rs 62,700 crore helicopter deal alone accounted for about 37 per cent of the Rs 1.69 trillion worth of contracts awarded by the MoD to domestic industry in 2024–25. In contrast, the ATAGS deal was about four per cent. The largest private sector order — the Rs 7,629 crore Vajra-T tracked artillery contract with Larsen & Toubro Ltd (L&T) — made up 4.5 per cent.

HAL vs Private defence firms

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WRITTEN BY

Aabhas Sharma

First Published: Aug 26 2025 | 3:38 PM IST

In this article : Blueprint Defence Magazine Indian Army