Indias self sufficiency is something of an illusion. Since 1956, the defense industries have all been state owned, with a current workforce of 1.4 million. Inefficiency and corruption have become a way of life. The billions spent on imported weapons has also been subject to corruption. Bribes and inflated prices have long made weapons imports an inefficient and costly operation. Four years ago, the government allowed foreign companies to invest in Indian defense companies. So far, there have been no takers. Its not worth the risks involved dealing with corrupt union and Defense Ministry bureaucrats, not to mention the inefficient companies themselves. The ineffectiveness of the domestic defense industries can be seen by the miniscule level of arms exports (about .4 percent of overall production).
Reforms of the defense industries have been going on for over a decade. Hundreds of weapons development projects have been cancelled because, on close examination, they were found to be failures. The American performance in wars against Iraq in 1991 and 2003, and the swiftness of the 2001 Afghanistan campaign have convinced many Indians that they need new, high tech weapons that are affordable, and work. Many of Indias current weapons are Cold War relics. In the next decade, India is looking to buy as many as 450 new fighter aircraft, a hundred air transports, 140 helicopters, new air defense systems, 1,500 tanks, 500 infantry fighting vehicles and 1,500 artillery. In the next twenty years, the navy wants a fleet containing three aircraft carriers, and over a hundred other warships.
There are a lot of private companies that are increasingly involved in weapons production, mainly by supplying components. But the private companies are wary of getting too involved with weapons production, because of the unpredictability created by all that corruption. At the moment, India is weaker because of its domestic arms industry, and salvation will only come from success in reducing corruption, the obtaining new technology or spending more money.
For several decades, India has been building up its defense industries. Currently, about two thirds of Indias weapons are produced in India. Over the next ten years, India plans to import $27 billion worth of production equipment to maintain these defense companies. But India still imports a lot of high tech stuff. Currently on the way are 66 British Hawk jet trainers, three Israeli Phalcon AWACS and an aircraft carrier (with 20 MiG-29s modified to operate from it). In negotiation are deals to import Israeli UAVs, Russian 300mm guided rockets and French submarines.