Full Transcript: India will have $25-30 billion of capex every year in defence over next decade, says Defence Secy Rajesh Kumar Singh

Defence Secretary Rajesh Kumar Singh

Speaking at the Network18 Reforms Reloaded 2025 summit in Delhi, Defence Secretary Rajesh Kumar Singh outlined India’s ambitious 15-year defence technology and innovation roadmap, projecting annual capital expenditure of $25–30 billion with a minimum of 75% to be spent domestically. Singh stressed that the government’s focus will be on indigenization, cutting-edge technologies like AI, hypersonics, drones, and space capabilities, alongside reforms to boost private sector participation in building India’s new-age warfare capacity.

Here is the full transcript:

Parikshit Luthra: Good evening ladies and gentlemen, and this is going to be a power-packed discussion, this much I can tell you. Secretary R. K. Singh is someone who needs no introduction. He is someone who has been holding almost 20 to 30 meetings with the industry almost on a daily basis. He was at the DPIIT, helming the DPIIT a few months back, and he has done a lot of work with FDI, with startups, with investments in the country.

So, he is someone who is very familiar with the next-generation reforms that the government is working on. But let me focus on the defense sector right now, and defense is going to be the major capex push of the government over the next 5 to 10 years, and that is because we don't have a choice when it comes to self-reliance. It is something that we realized the importance of more during Operation Sindoor, and since then there have been regular meetings at the defense ministry to see how to make sure we can bridge those gaps in our defense setup.

Secretary R. K. Singh, let me begin by asking you about the very important 15-year defense technology and innovation roadmap that the defense ministry recently came up with. Could you give us a sense of what is going to be the value of the kind of acquisitions that we are looking at over the next 10 to 20 years?

Rajesh Kumar Singh: Thank you, Parikshit, for having me here. So, the previous session gave us a nice lead-up to this one because defense was identified as one of the mega trends by the previous speakers. I think that is correct. If you are looking at it in value terms, I think you can expect, in capex terms, somewhere between 25 to 30 billion dollars minimum per year over the next decade, maybe a little more rather than less.

In terms of the technology roadmap, the roadmap has been put out by the services in the public domain. It is available now. It focuses on technologies that are of the future, whether it is AI, whether it is hypersonics, whether it is other types of standoff weapons, it is space, various types of precision ammunition, all of those technologies that they feel would be required in the future — nuclear-powered ships, etc. It is a fairly comprehensive roadmap of where they think the world is going and where we need to try to ensure that we leverage products and platforms from those kinds of cutting-edge technologies.

Parikshit Luthra: When it comes to having this mega innovation and technology roadmap, how much of this are we looking to build indigenously? How much are we looking to acquire? What is going to be the focus on indigenization?

Rajesh Kumar Singh: Our current plans are that at least 75% of our capex will be spent within the country. That is our normative target. Last year, we actually did 88% of our capex within the country. It will go up and down a little bit because it depends on certain areas where your technology readiness level, what they call described as TRL, is fairly high, where DRDO or other agencies have developed fairly strong technological bases; then you will probably do entirely indigenous procurement. Then there would be an intermediate category where you would need to do, hopefully, manufacturing within the country, but based on technology transfers from other countries.

There could be a smaller set of areas where foreign OEMs would not be willing to give you the latest technologies and your own access to such technologies is a long way off. In those cases, you may have to do a certain amount of off-the-shelf global buys as well. I would say that we need to take a fairly pragmatic look at all these three options, but the trend should be clear. We are going to double down in terms of our indigenization efforts. 75% will be the minimum. Hopefully, we will never go below that. When I mentioned 25-30 billion every year, most of that will be spent within the country, whether it is in terms of entirely Indian design or whether it is based on some levels of foreign technology transfers as well.

Parikshit Luthra: Just to put this into context for members of the industry sitting with us right now, investors from India and abroad, when it comes to building the capacity for new-age warfare in the country, what is it that is really taking away most of your time? What is going to be the three or four big focus areas of the government when it comes to spending money on new-age warfare and new-age capabilities?

Rajesh Kumar Singh: The obvious answers are different types of standoff weapons, drones, unmanned combat vehicles, including underwater drones. We also need to really focus on improving our satellite imagery so that we get real-time satellite imagery available to this country, which really depends on putting enough satellites into space, which hopefully, with SBS-3, will happen. In all of these areas, there are various types of precision munitions that you need.

All of these are areas where India does not always have the technology. Those are the areas where, including MALE and HALE category drones where we will need to do some kind of technology transfer but insist on manufacturing within the country. I am mentioning drones because we are just about to release an RFP for about 30,000 crores’ worth of MALE category drones, which will be made in India. We would hope that perhaps there could be an Indian design element there. But we are open to either Indian design or Indian manufacturing with foreign technology. But either way, it will be made within the country.

Those are the kinds of areas where we will be doing more and more. Just to give you another example — for example, whether it is missiles or whether it is different kinds of munitions, for a long time we have essentially ensured within this country that missiles are made by BDL, one public sector company. Munitions are largely made by MIL, which is another public sector company. The private sector is unable to invest partly because you have created almost a de facto reservation or you have allowed essentially nominations to be given to these companies. The problem is that their capacity to produce is quite limited. So, for long-duration wars, you will need to have much greater surge capacity. For that purpose, we have now tried to ensure that we move away from nominations, we move away from product reservations, and we create enough incentives on the basis of order visibility for the private sector to invest in all of these spaces.

Parikshit Luthra: Could you give us a sense of what will be the requirement when it comes to having ballistic missiles, supersonic missiles in the arsenal over the next 15 to 20 years, sir? And explain to us the need why you would need more manufacturers in this space.

Rajesh Kumar Singh: Essentially, if you see what has been happening in recent wars, you will find that the number of missiles being fired is quite huge. India, of course, followed a different path. We used it in a very calibrated way and we achieved termination of the conflict with calibrated use of our standoff missiles. But you cannot assume that every time the duration of the conflict can be curtailed. And if it is not curtailed, then you will start running out of stocks if you do not have enough wide industrial capacity to make missiles. If you are making only 100 missiles in a year, for example, you will obviously run short after a few months if there is a long-duration conflict. So, that is the kind of thing where we need to build up that very diversified, large public and private industrial base. And that is what we are aiming to do through our period of reforms, combining supply-side reforms in terms of ease of doing business with buying-side, demand-side reforms in terms of providing orders on a level playing field to the private and the public sectors.

Parikshit Luthra: You recently modified the defense procurement manual, giving more visibility of orders, giving more power to the armed forces to buy and maintain their platforms and to address their needs quickly. But what would be the next phase of reforms that we can expect from the defense ministry?

Rajesh Kumar Singh: So, as you mentioned, Parikshit, the revenue procurement manual deals with the consumables that the armed forces need in terms of ammunition, different types of spares, things like that. There, the reform is on the lines of what I mentioned, where items are available on the Government e-Marketplace, they do not have to run around taking approvals, they can straightaway buy from GeM. Where both private and public sector capacity exists, or we want to induce private sector capacity, we remove de-reservation and do things through open bidding. Here, I am talking about different types of ammunition and artillery shells.

In general, the idea is to go from any kind of domination-based, costless type of contracts to much more open, competitive bidding with full price discovery. And you mentioned the decentralization and the delegation of authority. Also, for start-ups, we are trying to create in this new manual a separate section where if a start-up, in association with the services, develops a particular product which is essentially tailored to meet the needs of the armed forces, we need to give some assurance in terms of orders.

And the idea is to give him at least a five-year period during which he is allowed to meet those requirements directly. After five years, we will open it up because you cannot tie yourself down to one guy too much. It leads to too much of market power and thereafter some level of price gouging as well.

Parikshit Luthra: The Defence Acquisition Procedure 2020 — this has been under review. This was said to be the big reform of 2025. By when can we expect that and what do you think would be the thrust of reform in the DAP route?

Rajesh Kumar Singh: I do not know if I mentioned, but in the revenue procurement manual, you are talking about an annual budget of about 1 lakh crore. The capital procedure, which is the Defence Acquisition Procedure, is much bigger. It is almost double that size. It is about 1, 80,000 crore. I am sure it will hit 2 lakh crores in the next couple of years. That reform process is now underway. Consultation, including with industry, is ongoing.

The target we have set ourselves is that by the end of the year, that is by December, in the year of reforms and in line with other reforms that the government is doing in terms of ease of doing business, in terms of decriminalization, in terms of other steps to reduce the compliance burden — in the same light, we will make this document for capex much more simple, much more friendly to the private sector and to the start-ups, and sort of compress some of the process timelines to use technology to cut down delays in areas like field evaluation trials, cost negotiations, those kinds of things. So, the intent is you will have the new DAP 2.0 hopefully by the first day of next year, and that will be a follow-up to the revenue procurement reform that we have just completed.

Parikshit Luthra: Now, considering since Operation Sindoor, we have gone in for replenishment procurements, we are going in for long-term procurements as well. To what extent do you feel that the ministry is going to either meet or exceed budgetary estimates?

Rajesh Kumar Singh: Well, last year for the first time we exhausted our budget. I think it is challenging to spend the money in the Indian context, given the very elongated sort of fail-safe type of procedure that we follow in terms of collegiate decision-making, approvals at the highest level involving a lot of inter-ministerial consultations. Last year, we did it, and I am sure this year also we will do it. It really depends on how many contracts you end up signing. Last year, we did a record number.

This year, we have already hit three-fourths of that — 1,50,000 crores’ worth of contracts we have already signed or are in the process of signing, if you include the LCA program. So, we are confident we can do at least 2,00,000-2,00,000 plus crores this year. And if we keep this up, then in terms of committed liabilities itself, you will ensure that the budget increasingly gets fully utilized.

As you do that, as you show to the Ministry of Finance that you can really start exhausting the budget and not surrendering some of the amount every year as we used to do earlier, I am sure you can ask for more. So, it is a two-way street. Let us start confidently ensuring that we utilize our budget entirely, which I think we will do this year. And then we can, over time, ask for at least a 10% to 15% increase every year. Incidentally, the services, through their capability development plans which they have — they have a five-year and a 10-year capability development plan — in all of their estimates, a 10-year increase in capex year-on-year is adequate to meet their requirements.

And I am pretty confident that the Ministry of Finance will have no problems in providing a 10% CAGR on the present capex year-to-year because, given the fact that in nominal terms our GDP is also growing up almost at that rate.

Parikshit Luthra: So, the recommendation from you would be to increase the defense capex in the next union budget, which is not very far, by at least 10%?

Rajesh Kumar Singh: At least 10% in nominal terms. But if you are asking me for a longer-term appraisal, I would say that, given the geopolitical turmoil as well as the neighborhood which is very challenging, in a medium-term sense and before the Finance Commission, I am going to project a bit more. So, it is a 10% year-on-year right now. But with the Finance Commission, I am going to ask for at least a 17% to 18% year-on-year increase over the next five years, because otherwise our share of the GDP actually has shrunk quite a bit. It has gone below 2%. And I think nobody can argue against at least a 2.5% share in GDP in the medium term, and maybe taking it further to 3%, you know, maybe in about 10 years’ time.

Parikshit Luthra: Right. And to keep it in line with some of the bigger developed nations when it comes to defense spending, I would like to ask you about the gaps when it comes to our fighter jet capabilities, sir. There is an AMCA program that is on. There is a fighter jet engine program that is on simultaneously. You have explained to us earlier that these are both programs which have a long 10-year horizon, and somewhere they will meet, they will merge possibly. But how do we meet our short-term needs? There are three countries in the world with fifth-generation fighter capabilities. You have got China, you have got Russia, you have got the United States. What are our options? Our options are only the US and Russia. How necessary is it for us to take the decision on acquiring fifth-generation fighter jets immediately? What is the horizon, timeline that you could possibly give us by when the government would have to take a decision?

Rajesh Kumar Singh: Parikshit, I really don't want to talk about specific platforms or procurements because that leads to too much speculation, and these are sensitive matters. What I would say is that if you don't have fifth-generation aircraft immediately, or if negotiations are ongoing, you can still make up for it or offset any advantage that the adversary has by creating enough offensive capacity in terms of larger numbers of, say, four or 4.5-generation aircraft and equipping them with better weapons, because besides the platform, it is the weapons that matter. The Air Force has certain capability gaps that it has pointed out.

The government will work on filling all of those gaps. You will find in the coming days, in terms of the procurement cycle — whether it is in terms of multiplier capabilities like refueling aircraft, like AWACS — all of those procurement decisions will be visible to you, and in terms of the 4.5-generation fighter aircraft also, you will see some procurement decisions coming. But I am not going to second-guess the decision-making because that is really not fair at this point of time to start talking about it. We should talk about procurements only at a certain time, when it is cleared by the DSC or when it is cleared by the top level in government.

Before that, talking about it creates too much noise, and we shouldn't have so much noise in procurements. Procurements should be done on the basis of requirements and technological assessments, commercial assessments by the services and by the acquisitions.

Parikshit Luthra: As you have spoken about 4.5-generation fighters, there have been reports in the media about how the Indian Air Force has made a proposal to acquire 114 Rafale fighters. What stage of discussion is this, and is the defense ministry, is the government likely to take a decision on acquiring a large set of 4.5-generation fighters in this fiscal itself?

Rajesh Kumar Singh: Again, I can't talk about specific platforms. I don't think it is appropriate because it is not something that we should be discussing on a daily basis. I would only say that when the last Air Force Commanders’ Conference took place, after that the Defense Minister asked me to create an important capability enhancement roadmap for the Air Force. We have done that. Based on that roadmap, we started various types of procurement activities. All of those will become visible to you in the coming days.

I would love to say that it can be done within this financial year, but the decision-making is not entirely only at my level. But yes, I am sure you will see visibility on all of those items I mentioned — 4.5-generation aircraft, refuelers, AWACS, weapons, all of those. But individual decisions, I will not discuss too much on them.

Parikshit Luthra: I would also like to ask you how we are balancing our relationship with the United States and Russia. Russia has been a long-standing defense supplier to India. The well-known notion is that 60-70% of our equipment is still of Russian origin. We are trying to expand our relationship with the US, with France, with European countries and other nations as well. During this time of trade volatility and trade talks with the US, how are we going to balance this and make sure our needs are met over the next three years or so?

Rajesh Kumar Singh: The Honourable Prime Minister has made it clear that the balancing is on the fringes. The main trend is actually for indigenization. Ultimately, we will either design and make our own, or we will take TOT but make within the country. Whichever country meets our requirements of this type — that means they are willing to at least technology transfer and make in India, or they are willing to ensure that critical technologies are shared or at least designs are shared for manufacturing. So, between the two, I would say that we will take a call for individual platforms and weapons depending on the cost-benefit ratio for us, for each of these systems. And you use the word balance, that is correct. We will balance our requirements. But at the end of the day, we will go by our service requirements of what we need.

I am sure there will be adequate opportunities in our defense budget or capex outlays for both the countries that you mentioned. All of them have niche capabilities that the other may not have. And we will continue to display strategic autonomy in our procurement decisions by turning to both of them, depending on our actual requirements.

Parikshit Luthra: My final question, you mentioned that we are looking to acquire AWACS and more future technology, including 4.5-generation aircraft. So, within this fiscal, if you could just broadly tell us, what would be the quantum or value of orders that can still be placed that you would be looking at?

Rajesh Kumar Singh: Well, as I said, we have already signed up or are about to sign contracts worth 1.5 lakh crores this year. I would say we can probably do another 75,000 crores of contracts. Again, I will not discuss individual platforms. So, last year, we did 2,09,000 crores, which was an all-time record. The highest ever before that was about 1 lakh crores. We will do at least that much, if not more, this year. And in terms of division, I am confident that the procurement decisions of this year will meet the requirements of the three services, and the division of the budget among the three of them — all of that will hopefully get exhausted.

Parikshit Luthra: Finally, one clarion call to the industry.

Rajesh Kumar Singh: I think we should be very clear. We should have no hesitation at all. And this again, I am saying from the Honorable Prime Minister, is very clear that there will be a level playing field for the private sector, that we will be doubling down on indigenization. The three words that he used during the Combined Commanders’ Conference that you mentioned earlier were — he made it out of the three words “Jai Hind.” So, “Jai,” he mentioned jointness, which is something that we did not really discuss, but jointness, Atma Nirvarta and innovation. So, those are the three pillars that we intend to work on.

And that again ensures that when it comes to our budget, which is our budget spend, which is what most of our members of the audience may be interested in, you can rest assured that the bulk of it will be spent within the country. And startups will get a leg up if they invest, if they come up with good products. We will ensure that whether it is private sector or startups, adequate orders will be made available to them. And we will treat all companies, whether they are public or private, as Indian companies first, making no distinctions among them.

Parikshit Luthra: Right. So jointness, Atma Nirvarta, and innovation. Very important messages there, sir, that you've shared with our audience. Thank you very much for joining us, taking our time to give a sense of the next 15 year roadmap of the Indian government.

Rajesh Kumar Singh: Thank you.