The Defence Research and Development Organisation (DRDO) has invited private Indian firms for the first time to be part of the development of the country's strategic missile and bomb systems for India's strategic architecture. The DRDO, the wing in charge of the Agni series, has issued an expression of interest for private manufacturers to be considered as development-cum-production partners for the future variants of nuclear capable systems, especially for the submarine launched systems. The process is being conducted from the Research Centre Imarat in Hyderabad, where the missile avionics and guidance project is well known, and September 24 is the last date by which companies can respond, while a technical discussion is planned on September 2 with interested businesses.

It is not a procurement notice of a minor nature. In the case of strategic arms manufacturing, India has seen only a public sector monopoly, with degree of control by the government in all the arms production plants, especially those that make nuclear capable arms, evident. What DRDO now proposes is a stage by stage process the private industry is filtered based on its technical and financial capabilities, is allowed to collaborate with DRDO scientists on creating prototypes, these prototypes are tested, and if the strategic forces order in bulk, then the industry is hired in to take over full production. Each project will have two companies empanelled, rather than relying on a single company.

The bar for eligibility is raised, and quite rightly. These are live munitions and the applicant must have an industrial licence for defence manufacture, and a separate licence from the Petroleum and Explosives Safety Organisation to take and store explosive. In the financial aspect, DRDO expects an annual turnover of Rs 100 crore, a net worth of more than Rs 34 crore, profitability in at least two of the previous five years, a good credit rating as well as ISO or another equivalent certification of quality. It also needs to be proven that the companies can scale up to bulk production runs of 50-100+ units or more, with verified infrastructure. A DRDO appointed expert committee will also physically visit each applicant's facility before they are shortlisted. At the moment, there are a couple of names doing the rounds in the industry; Solar Industries' defence wing Solar Aerospace and Defence, and Tata Advanced Systems, both of which have been working on developing just this kind of manufacturing muscle for several years now, just waiting for a time like this.

This is as much about what this move is being used for, as it is about the move itself. India's overall defence production touched a record Rs 1.78 lakh crore in the financial year that just ended, up 15.6 per cent on the year before and more than double what it was five years earlier. This is compared to Rs 43,746 crore in 2013-14 and the magnitude of the change is evident almost a four-fold increase in less than a decade. But in that ever-bigger pie, private sector's share, though growing is small. Out of the total output, it consumed about Rs 42,000 crore in the previous fiscal year, which was about 24 per cent, as compared to 22 per cent in the fiscal year before that and under 21 per cent two years back. Three quarters of all that is produced is still by state-owned enterprises. That the DRDO has now published an expression of interest is an attempt to shift that ratio further, and in the one category strategic weapons where private involvement so far has been virtually nil.

Under the policy words is a hard commercial logic. Goldman Sachs analysts have predicted that the earnings of listed private defence firms would grow at an annual rate of about 32 per cent from FY25 to FY28, with a lion's share of the projections based on this kind of opening. The domestic defence market will grow to Rs 10 lakh crore in the coming 20 years, while the government's indigenisation drive which includes ten positive indigenisation lists, comprising over 5,500 items, and a vendor and product registry that has crossed 41,000 entries has been in the works for years. The missing piece has been the strategic-systems layer, and that is now being integrated.

The biggest case to be made for introducing private capital and the engineering discipline that does private engineering is not ideological, but functional. Regardless of its capacity, public sector production has a maximum rate of acceleration when faced with a conflict. That concern has now come into sharp focus in the wake of recent operational success as senior DRDO officials openly said they have learned from actual engagements and urged manufacturers to invest more in the production readiness. The system has a private ecosystem with a proven project-management history, tighter delivery schedules, and the balance-sheet strength to cover massive capital expenditures, providing true redundancy, not a single, if any, chokeppoint in the public sector. It also creates a discipline on cost and quality that is competitive and one that is not produced in monopoly production structures.

All of this is not risk free. Giving nuclear-associated production lines to private companies opens up a number of valid questions over oversight, security clearances, and long-term accountability, all of which will require much more specific answers than an expression of interest. As a vision statement, however, this is India officially saying that the new era of strategic deterrence will be carried out as much by private factories as by government laboratories and those private companies that over the past decade have been developing facilities for handling and manufacturing missiles at their own facilities are about to find out whether they made the right bet.