Defence policy moved on several fronts in August. Indian defence manufacturers now have more room to compete, from supplying replacement parts to producing complete missile systems and reaching overseas markets. Along the border, India and China agreed measures to improve military communication and advance boundary negotiations. India’s partnership with Japan moved towards closer naval cooperation, shipbuilding and equipment transfers. Prime Minister Narendra Modi’s visit to Uzbekistan added a Central Asian dimension, giving fresh support to defence industry collaboration built on years of military exchanges and training. 

In Focus: 

India’s Defence Industrial Reforms 

August brought three decisions, at the component, production and export ends of the supply chain. On 18 August, the Department of Defence Production notified the sixth Positive Indigenisation List, covering 405 items with an estimated business potential of ₹3,070 crore. These are line-replaceable units, sub-systems, spares, components and raw materials rather than complete platforms, drawn from systems such as the Su-30MKI, the Light Combat Aircraft and T-72 tanks. On 25 August, Defence Minister Rajnath Singh approved the transfer of DRDO-developed technologies for all conventional missile systems to Indian industry, provided companies meet the applicable qualification, certification and regulatory rules. Three days later, the Department notified a simplified export regime, extending Open General Export Licence validity from two years to three and widening country coverage from 41 countries to all but sensitive and UN-sanctioned destinations. 

The indigenisation list does not bar imports. Instead, it requires procurement to shift to Indian suppliers once an Indian firm has developed the item successfully, and at ₹3,070 crore the business involved is small against defence output of ₹1.78 lakh crore in FY 2025-26. It also draws the standing criticism of these lists, that they give Indian firms the manufacture of a part while the design authority stays with the original designer, so little engineering knowledge travels with the work. 

The missile decision could expand private industry’s role considerably. On 25 August, Defence Minister Rajnath Singh approved the transfer of DRDO-developed technologies for all conventional missile systems to qualified Indian companies. Production contracts have traditionally gone largely to public-sector firms, principally Bharat Dynamics, without competitive tendering. Private firms can now compete for this work, with the Astra air-to-air and Pralay surface-to-surface missiles among the systems expected to attract early private participation. 

This could help the armed forces replenish missile stocks faster by drawing on more manufacturers. Private-sector defence output has tripled since FY17 to roughly ₹42,000 crore, although it still accounts for less than a quarter of national production. The harder task will be absorbing the technology and integrating the propulsion, electronics and software into reliable weapons. Access to DRDO’s designs gives firms a starting point; sustained engineering support and production experience will determine how much capability they acquire. 

On 28 August, the Department announced simpler export procedures, extending Open General Export Licence validity from two years to three and expanding coverage beyond 41 countries. The licence allows eligible exporters to authorise multiple consignments of specified items without seeking approval for each shipment. Countries on the negative or sensitive lists, and those under UN Security Council sanctions or arms embargoes, remain excluded. 

Why it matters for defence manufacturers and exporters: The reforms expand potential domestic orders and reduce repetitive export approvals. Manufacturers will still need to qualify for individual programmes, while exporters must check whether their products and destinations fall within the revised licence. 

India-China: Border Management and Boundary Talks 

National Security Adviser Ajit Doval met Chinese Foreign Minister Wang Yi in Beijing on 25 August for the 25th round of Special Representatives talks. This followed the 6 August meeting of the Working Mechanism for Consultation and Coordination on India-China Border Affairs. Their eight-point outcome, released on 26 August, provides for two additional senior military meeting points and two military hotlines in the Eastern and Middle Sectors. It also assigns discussions on boundary delimitation and border management to specialist groups under the Working Mechanism. 

The additional channels have a practical military purpose: giving commanders more opportunities to clarify developments on the ground and address incidents before misunderstandings escalate. For India, more dependable communication along the Line of Actual Control could make a difficult border easier to manage. Sustaining that stability also gives both governments greater room to pursue negotiations without each local confrontation interrupting the wider relationship. 

The agreed text calls for an “Early and Substantial Harvest” on boundary delimitation, continuing an approach accepted at the August 2025 talks. This envisages making progress on less contentious stretches before resolving the entire boundary. China’s separate readout also refers to a “package solution”, the comprehensive settlement envisaged in the 2005 guiding principles. The formulations appear compatible with an incremental approach, allowing the two sides to work through more manageable differences while continuing negotiations on the wider dispute. 

The diplomatic improvement is already supporting cross-border exchanges, including pilgrimage travel and the reopening of three designated trading points. President Xi Jinping is expected in New Delhi for the September BRICS summit, although Beijing had not formally confirmed his attendance as of 10 September. 

Why it matters for businesses exposed to China: A more predictable relationship would help companies plan investments and sourcing arrangements, particularly where Indian manufacturing depends on Chinese equipment or components. Commercial opportunities will depend on how diplomatic progress translates into decisions affecting these transactions. 

India-Japan: Maritime Security and Industrial Cooperation 

On 20 August, Defence Minister Rajnath Singh and Japanese Defence Minister Shinjiro Koizumi signed a Memorandum of Arrangement on Maritime Security Cooperation in New Delhi. It covers maritime information sharing, search and rescue, disaster relief, protection of shipping routes and logistical support through ports and repair facilities. Minister Koizumi described it as his ministry’s first agreement with another country devoted specifically to maritime security. 

The ministers also agreed to establish a working group at Director-General and Joint Secretary level to coordinate military, intelligence, equipment and industrial cooperation. Joint naval shipbuilding and design are among the areas to be explored. The operational relationship is expanding too: Japanese fighters are due to visit India for the first time for Exercise Veer Guardian 26. 

Minister Koizumi proposed “Design with Japan, Make in India” and said both sides had agreed on equipment transfers to strengthen the Indian Navy’s mine countermeasure capability. The joint statement places cooperation on mine countermeasures alongside exploratory shipbuilding discussions and work towards a reciprocal ship repair arrangement. Bringing naval requirements and industrial discussions into the same working group could help match Japanese technology with capabilities that Indian yards and suppliers can develop. 

Ikigai Law advises defence and aerospace companies, investors and institutions on procurement, export controls, corporate structuring and market entry. The practice includes Aparajita Srivastava, Anirudh Rastogi, Aman Taneja, Rutuja Pol, Nimisha S. Dutta and Akshat Tenneti.