The disintegration of the former USSR and the post-Pokhran sanctions hit India’s defence modernisation programme badly, leading to an acute shortage of spare parts and upgraded versions of existing weaponry. The spate of defence scams starting from Bofors to the Scorpene submarine deal has not been helping the cause of defence acquisitions either.

To find a way out of the crisis, the Centre has ushered in phased liberalisation into the defence industry realising the synergy and linkage effects that an enhanced domestic production could bring to the industry. The policy to deregulate certain select areas of the industry is aimed at import substitution through higher domestic production for meeting domestic defence requirements. The key areas of growth identified within the industry are expected to arise from the upgradation of the production capacity, technology transfer, and modernisation of the defence infrastructure

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