by Purusharth Arora

Solving BDL's backlog is not the same as building a sovereign defence. Without the freedom to design, improve, or export them independently these new assembly lines are just silhouettes of a sovereign defence industrial base.

On July 13, 2026, Bharat Dynamics Limited’s stock fell 3.2 per cent. The trigger was a Hindustan Times report that the Ministry of Defence was preparing to issue a Request for Proposal inviting private Indian companies to manufacture the ASTRA MK-2 beyond-visual-range (BVR) air-to-air missile — a weapon that, until that morning, only Bharat Dynamics Limited (BDL) had the authority to produce. Investors read competition. The stock moved accordingly.

The government’s press releases that week called it a ‘landmark policy shift’ and ‘a major boost for India’s defence sector.’ Both descriptions are accurate. What they leave out is the harder question — not whether this reform is real, but what kind of industry it actually builds, and whether an industry built on these foundations will still be standing, and genuinely competitive, in 2040.

India has created more missile manufacturers. It has not yet decided whether it wants a missile industry. Those are different things, and the distance between them is precisely what this reform has carefully avoided addressing.

Why It Happened, And Why That Matters

The honest account of this reform begins not with a principled belief in competition but with a practical problem: BDL is overloaded. For decades, DRDO designed India’s missiles and BDL manufactured them — an arrangement that worked well enough when the armed forces’ demands were modest and export ambitions were limited.

Neither is true anymore. The IAF needs ASTRA MK-2 at scale. The Indian Army needs Pralay replenishments. Indonesia wants Astra BVR missiles. The Philippines has expressed interest. BDL, fully committed to baseline domestic orders, does not have the bandwidth to execute high-volume export timelines simultaneously. The government needed more manufacturing capacity. Private firms were the available solution.

This matters because the trigger for reform determines the structure of reform. When you open a sector because the incumbent is exhausted, you design the opening around the incumbent’s needs. You add capacity without threatening the incumbent’s domestic position. You create relief, not competition. And India has done exactly that — consciously, deliberately, and with explicit statements to prove it.

The government’s own language is instructive. A report on the reform noted: “The entry of private companies should not be construed as a retreat by the public sector. Public sector companies henceforth cannot feel automatically entitled to produce DRDO-developed missiles” — which introduces contestability into procurement while simultaneously reassuring BDL that it is not being displaced. Both things are true. The second one is the more consequential.

Private firms — TATA Advanced Systems, Adani Defence and Aerospace, Larsen and Toubro, Bharat Forge, Kalyani Strategic Systems — are being invited into missile manufacturing on the condition that BDL’s domestic position is not fundamentally threatened. They will manufacture alongside BDL, not against it. They will receive overflow demand and export contracts, not compete for the Indian Army’s Pralay replenishment order or the IAF’s ASTRA MK-1 inventory. That distinction is not a footnote. It is the entire structural logic of what has been announced.

The Difference Between A Manufacturer And A Developer

Adani’s Shivpuri complex is already being positioned to support DRDO-developed systems including the Rudram-II anti-radiation missile, a short-range naval anti-ship missile, and the Gaurav long-range glide bomb. Adani did not wait for the RFP. It built the infrastructure in anticipation of being selected. That kind of forward investment is exactly what India’s defence industrial base needs from its private sector, and it deserves genuine credit.

But there is a question embedded in that investment that the current reform does not answer. Adani will manufacture missiles designed by DRDO, to DRDO’s specifications, under a technology transfer arrangement that DRDO controls. If Adani’s engineers discover a better propulsion configuration, a more efficient guidance system, or a smarter seeker design — can they develop it? Can they own that improvement? Can they offer it to a foreign customer without routing the export relationship through a government agency?

Under the current framework, the answer to all three questions is effectively no. DRDO retains design authority. The IP belongs to the Indian state. Export relationships flow through the government and the designated PSU. A private firm that cannot modify, improve, export, or independently develop a design is a manufacturer. It is not a developer. And a defence industrial base built on manufacturers without developers is not an industry in any meaningful sense — it is a more distributed version of the state’s existing production apparatus.

The closest historical parallel for what India is building is not Raytheon or MBDA — the missile companies that emerged from genuine competition and now own global market positions. It is closer to what India’s aero-engine story produced. GTRE built Kaveri to DRDO’s specifications for four decades and emerged with significant engineering knowledge but no independent design capability. Private missile manufacturers risk the same outcome — sophisticated assembly expertise, no sovereign design authority, and no pathway to the next generation of the weapon they have spent years learning to build.

What Meritocracy Would Actually Require

The question worth asking is not whether this reform is genuine. It is. The question is whether it builds anything that survives on its own terms — an industry that can compete, innovate, and export without the government’s procurement decisions as its primary life support.

A genuinely meritocratic private missile industry would need four things that the current reform does not provide.

The first is IP co-ownership. Private firms designated as Development-cum-Production Partners should co-own the intellectual property on programmes where they invest meaningfully in development — not merely receive technology transfer licences that expire or can be revoked. A private firm that cannot independently improve a design or offer it to foreign customers without state permission is manufacturing under licence, not building sovereign capability. The distinction matters because IP ownership is what converts manufacturing experience into engineering equity — the kind of accumulated knowledge that makes a company worth something beyond its current order book.

The second is domestic competition on new programmes. For programmes that have not yet been contracted — next-generation BVR missiles, the successor to Pralay, whatever comes after ASTRA MK-3 — private firms should be allowed to compete against BDL as prime contractors from a programme’s inception, not join it midway as capacity additions.

This is how the United States built Raytheon and Lockheed into genuine missile developers rather than designated producers. The Department of Defence ran Boeing and Lockheed Martin against each other on the Joint Strike Fighter — a genuine competition in which one company would win and the other would have to find another future. India has never run that kind of competition for missiles, and the current reform does not contemplate doing so.

The third is independent export authority. If TATA manufactures Astra MK-2, TATA should eventually be able to market and contract ASTRA MK-2 to approved foreign customers in its own name. Currently, defence export relationships are managed by the government and the designated PSU. Private firms cannot sign defence export contracts independently.

This means that however much manufacturing work TATA or Adani does, the commercial and diplomatic relationship with Indonesia or the Philippines runs through BDL and the Ministry of Defence. That is not how independent defence industrial players develop global market positions. It is how subcontractors develop dependency on whoever holds the customer relationship.

The fourth is a genuine R&D-to-production pathway. India’s iDEX programme has funded hundreds of defence technology startups. The number that have moved from iDEX challenge winner to production contract on their own technology is a fraction of that. A meritocratic missile industry would require a procurement pathway — not just innovation funding — in which a private firm’s superior technical solution can displace an existing DRDO design on competitive merit. Until that pathway exists, private investment in missile R&D is a bet with no guaranteed return, which means the only firms willing to make it are the large conglomerates with enough diversified revenue to absorb the risk. Startups — the firms most likely to produce genuinely disruptive innovation — will continue to win challenges and lose procurements.

The Ballistic Missile Question

Defence Secretary Rajesh Kumar Singh said publicly at an industry event that “the time has come to open ballistic missile production to private companies”. The remark was widely reported as a signal of further liberalisation to come. It deserves to be received with both genuine enthusiasm and an honest question about what infrastructure would make it work.

Ballistic missiles are not a more complex version of the Astra Mk-2. They carry deterrence implications, require different facility security architectures, and involve technologies subject to international non-proliferation regimes including the Missile Technology Control Regime (MTCR). The regulatory, oversight, and security framework that would govern a private Indian firm manufacturing ballistic missiles does not currently exist in any form applicable to the private sector. The United States spent decades building the facility security clearance system, the ITAR export control framework, and the oversight architecture that allows Raytheon and Lockheed to manufacture strategic systems under genuine private management. India’s equivalent framework for conventional missiles is nascent. For ballistic missiles it is, in practical terms, absent.

Opening ballistic missile manufacturing to private firms without that framework is a procurement announcement masquerading as industrial policy. The announcement is not wrong — India should eventually allow private firms to manufacture ballistic missiles. But the sequence matters. The oversight architecture needs to be built before the RFP is issued, not after the first private firm has already been selected and the oversight question becomes politically inconvenient to raise.

The Verdict

India’s missile manufacturing reform is real, it is necessary, and it is a genuine improvement on what existed before. BDL’s monopoly was a structural liability — a single production point for weapons that India needs to field at scale and export at volume simultaneously. Breaking that monopoly, even partially, is the right thing to do.

But solving BDL’s capacity problem and building India’s missile industry are different projects, and the current reform addresses the first while leaving the second largely untouched. India will have more missile manufacturers after this reform. It will not automatically have more missile developers, more sovereign design capability, or more firms capable of winning export contracts in their own name. Those outcomes require the four structural changes the reform has not yet made: IP co-ownership, domestic competition on new programmes, independent export authority, and a genuine R&D-to-production pathway.

The BDL stock market signal from July 13 is worth sitting with. Investors read competition and the stock fell. In a genuinely meritocratic missile industry, that reaction would be correct — BDL would face real competitive pressure and would have to earn its order book rather than inherit it. The fact that the government’s response was to reassure the market that BDL was not being displaced tells you everything about which kind of reform this actually is.

India has more missile manufacturers than it did in June. Whether it is building a missile industry — one capable of surviving on merit, developing next-generation weapons, and competing for global export contracts without the state as its primary intermediary — is a question the current reform has deferred, not answered.

Purusharth Arora is an analyst with a specialisation in strategic affairs, geopolitics, aerospace, defence, foreign policy and diplomacy