There is no limit on funds for local defence production: Army Chief

New Delhi, September 9, 2025. Indian Army has Rs. 26,000 crore in its capital procurement kitty and about Rs. 60,000 crore in its revenue procurement budget, and even more money can be made available in case of ‘atmanirbhar’ approach, the Chief of Army Staff General Upendra Dwivedi told India’s industry leaders at All India Management Association’s 52nd National Management Convention. “If it is an India made equipment, money is no problem at all,” he said.

However, the army chief qualified his statement saying that the industry has to be ready to produce the specified quality of items in the given time frame. He said that with 10% increase in defence spending every year, there is enough to stimulate and catalyse a cross-domain ‘atmanirbhar’ system to obtain cutting-edge solutions that go beyond the short-term requirements.

The General cited the example of Operation Sindoor, in which India’s soldiers, commanders, scientists, industrialists – all contributed without even a declaration of war. Even the equipment that was on trial stage was supplied where required, he said.

Emphasizing the need for local supplies for starting and sustain a war, General Dwivedi pointed to the Russia-Ukraine war. “We should be able to make sure that we have enough to last for a longer war…If you have low-cost high technology, you will be able to beat back a superior adversary also.” He said that the Operation Sindoor ending like a four-day test match showed the unpredictability of war.

Talking about the need for the industry to invest in defence development and production, the General said that the army has tried to ensure transparency and predictability in procurement. He said the army has created several new organization structures, such as the Rudra Brigade and Bhairav Battalion, to allow Indian industry to arm and equip those. He said that the army would use whatever the industry can initially provide and it would increase its purchase as the industry can scale up the supply. However, he emphasized, the goalposts will keep moving  as the Army’s need change in response to the adversary’s advances in technology. For example, he said, much of the missiles, drones and munition the army is looking at is to hit things 100kms-150kms away, but going forward it would want things for 750 kms range or beyond.

General Dwivedi said that the army has created multiple clusters of procurement across the country which can be approach for supplying research or equipment or to conduct trials of under-development items. “We are telling the industry, even if we do not want it, we are ready to certify your items so that you can export,” he said.

For large and risky projects, the army is offering seed money to consortiums, the army chief said. He pointed to the light tank project consortium that has been given the capital and a bouquet of converging technologies for local production.

Regarding the risk involved in winner-take-it-all defence R&D projects, the General said that the army ensures that there is more than one winner. He said that the rules and regulations require availability of at least three bidders and due to the paucity of industrial capability to produce in time, orders are always split between the L1 and L2 bidders. Moreover, he said, the army offers its stamp of approval to L1 to L5, those who pass the quality test, so that they can supply to other state forces.

General Dwivedi illustrated the army’s technology development and adoption strategy by calling it a mix of Google and Apple approaches. Under the Google approach, he said, the army is prepared to accept the initial versions and then improve those through use, and under the Apple approach, the army looks at ready-to-use solutions that it can adapt with minor adaptation. However, the General said, modifying an imported technology is a problem, therefore, owning one allows the army to change it for its requirements.

Talking about Indian Army’s engagement with academia, General Dwivedi said that the army has opened four technology cells in IITs and IISc, which are working on ramjet, advanced materials and other requirements. He said that since these institutes are government owned, it is easier for the army to collaborate with them.

Replying to a question about army’s role in Quad, the General said that the Quad is largely a political initiative and the political guidance would determine what army could do.

The session was moderated by Mr Nikhil Sawhney, Vice Chairman and Managing Director, Triveni Turbine Ltd.

Ms Rekha Sethi, Director General, AIMA introduced the session.

The session was attended by more than 500 business and management leaders in person and it was live-streamed on AIMA’s social media channels.