Defence Industrialisation and Employment Generation in India: Assessing the Impact of Indigenous Defence Production on Skilled Employment, Manufacturing and Economic Growth

For decades, the story of India's military strength was written largely in the language of imports. The nation relied on buying weapons, aircraft, and ships from other countries to keep its borders secure. This approach meant that the money spent on defense flowed out of the country, and the factories that built these complex machines remained elsewhere. However, a significant shift began around 2014, driven by a national push to build these capabilities at home. This movement, known as defense industrialization, is not just about security; it is about transforming how a country makes things. When a nation decides to design and build its own advanced machinery, it does more than just arm its soldiers. It creates a ripple effect through the economy, demanding new skills from workers, encouraging local businesses to join the supply chain, and potentially boosting the overall wealth of the country. The question researchers ask is whether this massive investment in making weapons at home actually pays off for the regular economy, creating jobs and growth, or if it remains a closed loop of government spending.

A recent study by Sidharth Kumar, a researcher at Veer Kunwar Singh University, dives into this exact question. The work examines the last decade of India's defense journey, specifically looking at the period from 2014 to 2025. The researcher did not conduct new experiments in a lab or survey workers on the factory floor. Instead, they carefully gathered and analyzed existing records from official government sources, including the Department of Defence Production and the Ministry of Defence. By piecing together data on how much money was spent, how many weapons were made, who made them, and how many people were hired, the study paints a picture of a sector in rapid transition. The goal was to see if the push to make India self-reliant in defense was also acting as a powerful engine for the country's broader economic health.

The numbers tell a story of rapid expansion. In the early years of this push, the total value of defense equipment produced within India was around 84,643 crore rupees. By the time the data reached the 2024–25 period, that figure had climbed to approximately 1.50 lakh crore rupees. This growth was not limited to the massive government-owned factories, known as Defence Public Sector Undertakings. A significant portion of this surge came from private companies, small and medium-sized businesses, and new technology startups. In just five years, the production value from private companies nearly doubled, rising from about 17,268 crore to nearly 34,000 crore rupees. This shift suggests that the government's policies, which encourage local manufacturing, are successfully inviting private capital and innovation into a field that was once dominated by state-run enterprises.

This industrial growth has also started to spill over into international markets. India is no longer just buying weapons; it is selling them. Defense exports, which were a modest figure in previous years, reached an all-time high of 23,622 crore rupees in 2024–25. What is particularly notable is that private companies are now responsible for a major share of these exports, sending Indian-made systems to more than 80 countries. This change indicates that the quality of domestic manufacturing has improved to a point where it can compete globally. The study highlights that this is not just about moving goods across borders; it is about the entire ecosystem maturing. When a company like Bharat Electronics Limited, a government-owned enterprise, reports that 74% of its sales come from products it developed itself, it signals a deepening of technical skill and a move away from simply assembling parts made by others.

The human element of this transformation is where the most complex questions arise. Modern defense manufacturing is no longer just about welding steel or assembling simple parts. It requires engineers, software specialists, scientists, and technicians who can work with advanced materials, artificial intelligence, and precision robotics. The study points out that this shift creates a demand for highly skilled workers. For instance, one major defense company employed nearly 9,000 people in a single year, with more than half of them being engineers and scientists. This suggests that the industry is generating high-quality jobs that require specialized training. However, the researcher also notes a potential tension. As factories become more automated and use advanced robots to build weapons with greater precision, the need for routine, semi-skilled labor might decrease. The study suggests that while the total number of jobs might not explode in the way a traditional factory boom might, the quality of those jobs is rising. The challenge for the future is to ensure that the workforce is continuously trained and reskilled so they can move from simple assembly tasks to the more complex work of designing, maintaining, and integrating these high-tech systems.

The research concludes that India's drive to build its own defense industry is successfully creating a new industrial ecosystem. It has moved the country from a position of dependence to one of increasing self-reliance, with a growing private sector and a rising export capability. The study suggests that this transition acts as a powerful demand mechanism for the wider economy. When the government spends money on buying domestic weapons, it stimulates investment in factories, supply chains, and research facilities. This spending helps create skilled employment and encourages technological development that can benefit other parts of the manufacturing sector. However, the paper also cautions that these benefits are not automatic. The growth in production does not guarantee a proportional increase in jobs if the technology becomes too automated without a parallel effort to train workers. The true success of this industrialization, the study argues, will be measured not just by the volume of weapons produced, but by how well it creates sustainable, high-skilled careers and strengthens the country's overall manufacturing base. The path forward requires a careful balance between adopting the latest technology and ensuring that human capital grows alongside it, turning a strategic necessity into a broad engine for economic development.