First Principles IASlearning from first principles

Indigenisation of technology and developing new technology

Syllabus
Indigenisation of technology and developing new technology
As of
October 2026
  • indigenisation
  • import substitution
  • transfer of technology
  • absorptive capacity
  • reverse engineering
  • technology denial
  • Make in India
  • Aatmanirbhar Bharat
  • production linked incentive
  • positive indigenisation list
  • indigenous content
  • offsets
  • strategic autonomy
  • value addition

The first principle

Owning a technology means being able to design it, change it and repair it without anyone's permission, and that ability cannot be bought in a box. It is learnt by doing, rung by rung, from assembling what others designed to designing what others assemble. Indigenisation is therefore a long process of building absorptive capacity, the skills, suppliers and institutions that let a country take in knowledge and improve on it; a product made in India is the result, not the definition.

The core

The ideas

  • Indigenisation is the replacement of imported products, parts or know how by those designed or made at home, and it is measured in two ways: indigenous content, the share of a product's value made in India, and indigenous design, whether the design rights and the ability to change it lie in India.
  • Import substitution was the policy of the 1950s to the 1980s, which protected domestic industry behind tariffs and licences so that it could make what was imported. It built a broad industrial base but, sheltered from competition, much of that industry stayed costly and technologically behind, which is the lesson today's policy tries not to repeat.
  • Transfer of technology is the passing of know how from a seller to a buyer, through licensed production, joint ventures, consultancy or training. Sellers readily share how to assemble, less readily how to make components, and almost never how to design, so a transfer agreement is only as good as the learning the buyer does with it.
  • Reverse engineering is learning by taking a product apart and working out how to make it. India's generic medicine industry grew this way under the Patents Act 1970, which until 2005 granted patents only on processes, not products, so Indian firms could make a patented drug by a new route.
  • Technology denial is the refusal of a technology on strategic grounds, through national export controls or through regimes such as the Missile Technology Control Regime (MTCR). Denial raises the cost of a technology but also removes the option of buying it, which is why some of India's best capabilities came from denial.
Ladder of how a country acquires technology, from buying it to designing and exporting it, with an Indian example at each rungThe ladder of self reliance6 Design and exportown design sold abroad. Example: BrahMos tothe Philippines; UPI links abroad5 Indigenous designdesign, not just make, at home. Example:Tejas, INS Vikrant, PSLV, PARAM4 Reverse engineering and adaptationlearn by taking apart and improving.Example: generic medicines under the 1970Patents Act3 Transfer of technologythe seller teaches the know how. Example:Su-30MKI made by HAL; Scorpene submarinesat Mazagon2 Licensed assemblyparts come in, assembled here. Example:early mobile phones; MiG-21 assembly1 Importbuy the finished product. Example: mostsemiconductors and jet engines todayEach rung needs the one below it: a country thatnever assembled rarely learns to design.
Figure: Six rungs from importing a finished product to designing and exporting one, with an Indian example at each rung.

The policy instruments

  • The Technology Policy Statement of 1983 first made technological self reliance an explicit goal, asking that imported technology be absorbed and improved rather than bought again.
  • Make in India (2014) sought to raise manufacturing through easier rules for investment and business, and Aatmanirbhar Bharat (2020) added a stronger push for domestic capability in strategic sectors.
  • Production linked incentives (PLI), approved for 14 sectors in 2020 and 2021 with about Rs 1.97 lakh crore, pay firms a share of their additional sales for a few years. They buy scale first and hope that capability follows, so their test is whether value addition in India rises over time.
  • Missions for frontier technology, such as the India Semiconductor Mission (2021), the National Quantum Mission (2023) and the IndiaAI Mission (2024), fund capability where no market yet exists, and the Electronics Component Manufacturing Scheme (2025) moves electronics support from assembly to components.
  • Defence procurement rules make Indian design the first choice: the Defence Acquisition Procedure 2020 ranks purchases from Buy (Indian, indigenously designed, developed and manufactured) down to Buy (Global), and positive indigenisation lists bar the import of named items after set dates. The details belong to the defence platforms note.
  • Opening space to private firms through the Indian Space Policy 2023 and the authorising body, the Indian National Space Promotion and Authorisation Centre (IN-SPACe), let start ups build rockets and satellites, so that the Indian Space Research Organisation (ISRO) can move to new technology while industry makes the proven systems.

Dimensions

  • Strategic. A country that imports its weapons, chips or navigation depends on the seller in a crisis, as India learnt when assured access to satellite navigation was not available during the Kargil conflict of 1999; indigenisation is the material basis of strategic autonomy.
  • Economic. Imports of electronics, defence equipment and the raw materials for medicines cost foreign exchange, while a domestic supplier base creates skilled jobs and spreads knowledge to other industries.
  • Technological. Each design programme trains engineers who move to the next one, so the real return on Tejas or the cryogenic engine is the people and suppliers it created.
  • Fiscal. Indigenous development is slow and costly at first, and a state that buys Indian accepts higher prices and delays in return for long term capability, a trade that must be argued openly.
  • International. Self reliance is not autarky: India still needs partners for engines, lithography and advanced materials, and joint development with friendly countries is often faster than going alone.
Two by two matrix placing technologies by how complex they are and how large the Indian market isWhere indigenisation is easy and hardSmaller Indian marketBigger Indian marketHigh complexity,small marketjet enginessubmarinesfighter aircraftEUV lithographyhardest: needspatient state moneyHigh complexity, bigmarketchipsvaccinessolar cellsEV batteriesPLI and mission moneyaimed hereLow complexity, smallmarketniche sparesspecial toolslists and iDEX forMSMEsLow complexity, bigmarketphone assemblygeneric drugstwo wheelersalready Indian; climbup the value chainUpper row: complex technology. Lower row: simplertechnology. Gold is where policy money now goes.
Figure: Technologies placed by complexity and by the size of the Indian market; big markets attract private investment, while complex technologies with small markets need patient state money.

In practice

  • Defence. Indigenous defence production reached a record Rs 1.78 lakh crore and exports Rs 38,424 crore in 2025-26, up from about Rs 1.5 lakh crore and Rs 23,600 crore a year earlier, led by BrahMos, artillery, rockets and ammunition (Press Information Bureau, 2026). Yet India was the world's second largest arms importer in 2020-24 (Stockholm International Peace Research Institute, SIPRI, 2025), because engines, high end sensors and many platforms still come from abroad. The aircraft carrier INS Vikrant, commissioned in 2022, has about 76 per cent indigenous content, while the Tejas fighter flies on an American engine.
  • Space. Russia's agreement to transfer cryogenic engine technology was curtailed in 1993 under pressure from the MTCR, and ISRO took two decades to build its own; the indigenous cryogenic stage first flew successfully on the Geosynchronous Satellite Launch Vehicle in 2014 and now powers the LVM3. The Navigation with Indian Constellation (NavIC) regional navigation system answered the Kargil experience.
  • Computing. When the export of a Cray supercomputer was refused in the late 1980s, the Centre for Development of Advanced Computing (C-DAC) built the PARAM 8000 in 1991, and the National Supercomputing Mission continues that line.
  • Electronics. India went from importing most of its mobile phones in 2014 to making nearly all the phones it uses, and phones became its largest electronics export. Domestic value addition, however, is still modest, because chips, displays and many components are imported, which is why policy has moved to components and semiconductors.
  • Committees. The Kelkar Committee (2005) asked for private firms to become partners in defence production; the Dhirendra Singh Committee (2015) led to the strategic partnership model, under which chosen Indian firms build platforms with foreign partners; the Shekatkar Committee (2016) pressed for leaner forces and more spending on modernisation.
Table of six cases in which India answered technology denial or import dependence with its own technologyDenial turned into capabilityCryogenic engineTrigger: Russia's transfer stopped under MTCRpressure, 1993Answer: CE-7.5 flew on GSLV in 2014; CE-20powers LVM3SupercomputerTrigger: Cray export refused in the late 1980sAnswer: C-DAC built PARAM 8000 in 1991Satellite navigationTrigger: no assured GPS access during Kargil,1999Answer: NavIC regional system, operational from2018MissilesTrigger: export controls after 1974, the MTCRfrom 1987, sanctions in 1998Answer: IGMDP from 1983: Agni, Prithvi, AkashMedicinesTrigger: product patents priced drugs out ofreachAnswer: 1970 Act allowed process patents; Indiabecame a generic supplierMobile phonesTrigger: nearly all phones imported in 2014Answer: most phones sold in India now madehere; value addition still low
Figure: Six cases in which technology denial or import dependence was answered by Indian capability, and where each stands.

Issues and way forward

  • Thin research base. Firms spend little on research because they can buy proven technology, so design capability grows slowly; linking incentives to research and design in India, and not only to sales, is the remedy most often proposed.
  • Missing components and materials. Assembly moved to India faster than the supplier base, so value addition stays low; component schemes, standards and testing facilities for small firms are needed to deepen the chain.
  • Small and uncertain orders. No firm builds a production line for one order, and defence orders have often been cut or delayed; long term, assured orders, as the positive lists promise, give industry a reason to invest.
  • Weak transfer of technology. Licensed production of the Su-30MKI and other platforms taught assembly but not design, so contracts should tie transfer to design knowledge and joint development.
  • Cost and time overruns. Long programmes lose user support; involving the user from the design stage, fixed milestones and independent reviews keep projects on track.
  • The protection trap. High tariffs and blanket preferences can recreate the costly, sheltered industry of the import substitution era; protection should be time bound and tied to export and quality targets.
Cause and effect chart of why indigenisation is slow in India and the fix for each causeWhy it is slow, and the fixcausefixLow R&D spendingabout 0.64% of GDP;firms spend littleRDI loans, ANRF, taxcreditsThin supplier basefew makers ofcomponents andmaterialsPLI for components;defence corridorsSmall, uncertainordersno firm builds a linefor one orderpositiveindigenisation lists;assured buysWeak transfer oftechnologysellers shareassembly, not designoffsets tied todesign; jointdevelopmentLab to market gaplabs rarely licenseto industrytechnology transferoffices; iDEX, BIRACLong test andapproval cyclesyears to certify anew partfaster trials; userinvolved from thestart
Figure: Six causes of slow indigenisation, each with the fix that policy or committees have proposed.

Common confusions

  • Indigenous content and indigenous design. A product assembled in India from imported parts can show high local content by value and still have no design ownership; design rights decide whether India can change or export it.
  • Import substitution and indigenisation. Import substitution is a trade policy that blocks imports, while indigenisation is a capability goal that can be pursued with open trade, competition and partners.
  • Transfer of technology and offsets. Transfer of technology passes specific know how about a product, while an offset is a commitment by a foreign seller to spend part of the contract value in India, which may or may not involve technology.
  • Make in India and Aatmanirbhar Bharat. Make in India (2014) aimed at manufacturing and investment, while Aatmanirbhar Bharat (2020) put self reliance in critical and strategic sectors at the centre.
  • Self reliance and self sufficiency. Self reliance means the ability to choose and to design, not making everything at home; a self reliant country can still import, but it is never forced to.

For the exam

  • Keyword bank: absorptive capacity, transfer of technology, reverse engineering, technology denial, indigenous content, indigenous design, value addition, strategic autonomy, positive indigenisation list, production linked incentive, Missile Technology Control Regime, import substitution, design and develop in India, supplier ecosystem.
  • Previous year questions: Practise the previous year questions on this topic →
  • Use in an answer:
    • Introduction with data: India's defence production reached Rs 1.78 lakh crore in 2025-26, yet it remained the world's second largest arms importer in 2020-24, which shows how far assembly has run ahead of design.
    • Introduction with a source: The Technology Policy Statement of 1983 set the goal of technological self reliance by absorbing and improving imported technology rather than buying it again.
    • Conclusion: Denial gave India its cryogenic engine, its supercomputers and NavIC; the task now is to build the same capability without waiting for denial, through research, components and assured orders.
    • Conclusion: Indigenisation succeeds when the country owns the design, not just the factory, so incentives must reward research and value addition in India rather than assembly alone.