The Ministry of Defence (MoD) is in the process of documenting the impact of defence spending on the Indian economy, with the government expected to spend $20 to 30 billion in the next decade as part of modernisation of the armed forces, Defence Secretary Rajesh Kumar Singh said at the Defence Conclave 2025 organised by Axis Bank on Monday.

“Towards this objective, the Defence Accounts Department and the Acquisition Wing of the Department of Defence are working on a system of end-to-end automation of defence revenue and capital procurement systems using data science, machine learning and artificial intelligence to create a high level management information system,” Singh told a gathering of government officials, defence experts, bank and industry representatives.

The effort, Singh said, will provide an economic impact analysis in addition to streamlining the processes and making them more transparent and accessible to all stakeholders.

Due credit

The Defence Secretary explained that the move is destined to give due recognition to the defence industry and that will happen only when the impact of defence spending on the nation’s economy is documented. On one hand, defence expenditure creates jobs and stimulates technological innovation, driving economic growth, while on the other hand it promotes innovation and enterprise, he noted.

He urged the banks to develop capabilities to offer advisory services to ensure that MSMEs and the start-ups are supported, mitigating their risks and maximising value for money.

Collaborative partnerships between the government, banks, and vendors can drive innovation, reduce costs, and accelerate the delivery of cutting-edge defence technologies and help vendors grow over time, said the senior IAS officer.

Doing away with barriers

Singh said the defence industry in India is at the cusp of massive expansion. For that to happen, he was of the view, the focus has to be on reducing the entry barriers for new players and new technologies, so that our defence industrial ecosystem becomes adaptive, agile and capable of responding quickly to the changing nature of future warfare.

There are 16 Defence PSUs, 430 licensed companies and around 16,000 MSMEs.

Speaking at the conclave before Singh, Secretary to the Department of Defence Production Sanjeev Kumar said through the Ministry’s initiative of iDEX, ₹2,000 crore worth of orders have been generated for 500 start-ups, which is not a very good amount, but certainly an encouraging one.

He called upon the big boys of the industry to hand hold MSMEs and start-ups for true realisation of self-reliance in the defence space.

Published on February 17, 2025