The Role of Public-Private Partnership in National Defence

In 2016, when India was negotiating the Rafale deal with France, a critical debate emerged: Why was a country with one of the world’s largest armies still dependent on foreign suppliers for cutting-edge defence technology? The question wasn’t new. Since independence, India had struggled to balance its defence needs with self-reliance. Despite an extensive public-sector defence infrastructure, private industry remained on the sidelines for decades.

Fast forward to today, and the scenario is changing. Indian private firms are building artillery, manufacturing drones, and collaborating with global defence giants on advanced fighter jet engines. This transformation hasn’t happened in isolation. It has been driven by a deliberate and strategic embrace of public-private partnerships (PPPs) in defence, a model that has reshaped military industries worldwide.

As India marches towards its goal of becoming a global defence powerhouse, PPPs have become the backbone of its military modernisation. But how did we get here, and what challenges remain? For India, a country with vast borders and diverse security concerns, the integration of public-private partnerships (PPPs) into its defence framework has emerged as a pivotal strategy. This collaborative approach not only bolsters national security but also propels technological innovation and economic growth.

The Genesis of Defence PPPs in India

Historically, India’s defence production was predominantly managed by state-owned enterprises. These establishments laid the foundation for the country’s defence capabilities. But the rapid evolution of warfare technology and the need for self-reliance necessitated a paradigm shift. Recognizing this, the Indian government initiated policies to encourage private sector participation. It aimed to harness the agility, innovation, and efficiency that private enterprises offer.

Key Drivers for Public-Private Collaborations

Technological Advancement:

The modern battlefield is evolving rapidly, with warfare becoming increasingly dependent on technology-driven solutions. The private sector, with its focus on research and development (R&D), plays a big role in bringing cutting-edge innovations into the defence industry. Public-sector entities like the Defence Research and Development Organisation (DRDO) have historically spearheaded India’s defence technology, but their capabilities are often constrained by bureaucratic delays and funding limitations.

By collaborating with private companies, the defence sector gains access to advanced technologies such as:

• Artificial Intelligence (AI) & Robotics: AI-powered surveillance systems, autonomous drones, and robotic combat units are transforming warfare. Private Indian firms like Tonbo Imaging and ideaForge are already developing AI-driven defence solutions.
• Cybersecurity & Electronic Warfare: As cyber threats rise, the need for robust cyber defences is growing. Companies like Tata Advanced Systems and Bharat Electronics Limited (BEL) are working with the government to strengthen cybersecurity infrastructure.
• Next-Generation Weaponry: Indian private-sector firms are contributing to the development of precision-guided munitions, advanced missile systems, and smart artillery. The Kalyani Group, for example, has been a key player in artillery and armoured vehicle production.

Collaborations with private firms also facilitate technology transfer from global defence giants. For example, the India-US Defence Technology and Trade Initiative (DTTI) enables Indian firms to gain access to advanced American defence technologies through co-development and co-production agreements.

Economic Efficiency:

One of the biggest advantages of PPPs is their ability to reduce costs and optimise resource allocation. Defence projects are traditionally expensive and involve long development cycles. By sharing investments and risks, the government and private players can ensure that projects remain within budget while meeting operational requirements.

Benefits of economic efficiency in PPPs include:

• Cost-Sharing Mechanisms: The private sector invests in R&D, manufacturing, and infrastructure development, reducing the financial burden on the government. This allows defence projects to proceed without excessive delays due to budget constraints.
• Faster Project Execution: Unlike government-run defence public sector undertakings (DPSUs), private firms operate with streamlined processes, leading to quicker execution of contracts. The production of K9 Vajra howitzers in collaboration with South Korea’s Hanwha Defense is a prime example of timely project completion.
• Scalability & Export Potential: Private companies, driven by profit motives, aim to scale up production efficiently. This not only meets India’s defence needs but also enables the country to emerge as an arms exporter. Under the Aatmanirbhar Bharat initiative, India has set an ambitious target to achieve Rs 35,000 crore ($4.2 billion) in defence exports by 2025.

A good example of economic efficiency in action is the HAL-Tata Advanced Systems partnership. HAL has been able to scale up the production of Tejas fighter jets, reducing costs. This has happened while ensuring faster deliveries to the Indian Air Force.

Self-Reliance (Aatmanirbhar Bharat): India has been among the world’s largest arms importers for decades, relying on countries like Russia, France, and the United States for fighter jets, submarines, and missile systems. This dependence creates strategic vulnerabilities, especially during geopolitical tensions. The push for self-reliance in defence, driven by the Aatmanirbhar Bharat initiative, aims to change this dynamic.

Public-private partnerships are at the heart of this strategy. By encouraging indigenous defence production, PPPs:

• Reduce Import Dependence: India has already cut its defence imports by over 50% in the last five years, with private players increasingly supplying critical defence equipment. Companies like Larsen & Toubro, Tata Advanced Systems, and Bharat Forge are developing indigenous solutions to replace foreign imports.
• Strengthen Domestic Defence Manufacturing: The government’s Positive Indigenisation List bans the import of over 500 defence items, ensuring that they are manufactured locally through PPPs.
• Encourage Foreign Direct Investment (FDI): With the FDI limit in defence manufacturing raised to 74%, global defence giants are now more willing to establish joint ventures with Indian firms. The collaboration between DRDO and French company Safran to develop a jet engine for India’s AMCA (Advanced Medium Combat Aircraft) programme is a direct result of this policy.

The success of the BrahMos missile programme is a testament to how PPPs can drive self-reliance. Developed jointly by DRDO and Russia’s NPO Mashinostroyeniya, the BrahMos missile is now being manufactured in India with increasing private-sector involvement. The government is also eyeing exports to countries like the Philippines, marking a significant milestone in India’s defence manufacturing capabilities.

Notable Indian Defence PPP Initiatives

• Advanced Towed Artillery Gun System (ATAGS): Initiated in 2013 by the DRDO, the ATAGS project aimed to develop a modern 155 mm artillery gun. They collaborated with private players like the Kalyani Group and Tata Power SED. This partnership showcased India’s capability to design and develop advanced artillery systems indigenously.
• Kaveri Jet Engine Project: Embarking on an ambitious journey to develop a homegrown jet engine, India collaborated with international giants such as General Electric (US), Rolls-Royce (UK), and Safran (France). This initiative underscores the importance of global partnerships in achieving technological self-reliance.

Global Perspectives on Defence PPPs

• Estonia’s Defence Tech Investments: Facing regional security threats, Estonia’s tech entrepreneurs have proactively invested in defence technologies. Collaborations between the government and private tech firms have accelerated the development of advanced defence solutions. It has also exemplified the impact of PPPs in bolstering national security.
• European Defence Fund Initiatives: European nations are exploring joint financing mechanisms, such as a European defence bank, to fund military projects. This collective approach aims to streamline procurement and enhance defence capabilities across the continent.

Challenges in the Indian Context

Regulatory Hurdles: Complex approval processes and bureaucratic red tape can deter private investments. Simplifying procedures is essential to foster a conducive environment for PPPs.

Security Concerns: Ensuring that sensitive defence information remains protected is paramount. Robust frameworks must be established to safeguard against potential breaches.

Financial Constraints: Defence projects require substantial investments. Balancing profitability for private players with national interests necessitates innovative financial models.

Strategies for Strengthening Defence PPPs

1. Policy Reforms: Streamlining regulations and offering incentives can attract more private players into the defence sector. Clear guidelines and support mechanisms will encourage sustained participation.
2. Capacity Building: Investing in skill development ensures that both public and private sectors have the requisite expertise to undertake advanced defence projects. Collaborative training programs can bridge existing skill gaps.
3. Enhanced Cybersecurity Measures: As digital warfare becomes a reality, PPPs in cybersecurity are crucial. Initiatives like the US’s Joint Cyber Defense Collaborative (JCDC) serve as models for fostering collective action against cyber threats. weforum.org
4. International Collaborations: Engaging with global defence manufacturers and technology firms can facilitate knowledge exchange and access to advanced technologies, propelling India’s defence capabilities to new heights.

PPP: The Dawn of a New Era

In 1962, when India faced its first defeat against China, a stark realisation dawned on it, the nation could not afford to rely on foreign powers for its defence needs. That lesson echoed again during the Kargil War of 1999, when India scrambled for high-altitude warfare equipment. But today, the narrative is shifting. No longer a passive buyer of global arms, India is becoming a creator, an innovator. India is transforming into a big exporter of defence technology.

This transformation is powered by public-private partnerships. The story of the K9 Vajra howitzer, built in collaboration between L&T and South Korea’s Hanwha Defense, is an evidence to this shift. Delivered ahead of schedule, these self-propelled guns now guard India’s western frontiers. Similarly, the Tejas fighter jet, once dismissed as a sluggish project, is now being exported, thanks to the synergy between HAL and private vendors.

But this journey is far from over. Wars of the future will not just be fought with tanks and missiles but also in cyberspace and outer space. India’s PPP model must evolve, embracing AI-driven warfare, drone technology, and advanced cybersecurity solutions.

With the private sector and government marching together, India’s military-industrial complex is catching up with the world. It is now preparing to lead it.