Defence Decoded: Navigating India's Complex Defence Regulatory Regime

In this ‘Leading Questions’ piece, Uday Singh Ahlawat and Ishita Goel demystify some of the most common questions arising under India’s defence regulatory regime. As the country pursues greater self-reliance in defence production, encourages foreign investment and strengthens its position as a global manufacturing hub, businesses must navigate a complex interplay of licensing requirements, procurement rules, technology transfer frameworks and compliance obligations.Question: What is the legal framework governing defence manufacturing in India?Answer: Defence manufacturing in India is primarily governed by two legislative frameworks, i.e., the Industries (Development and Regulation) Act, 1951 (“IDR Act”) and the Arms Act, 1959 (“Arms Act”). The applicable framework depends on the nature of the product being manufactured.Defence items notified under Annexure I of Press Note No. 1 (2019 Series) (the “Press Note”) require an industrial licence under the IDR Act, while products covered under Annexure II of the Press Note are regulated under the Arms Act. Although both frameworks regulate defence manufacturing, they differ in terms of the licensing process, regulatory oversight and post-licensing compliance requirements.Accordingly, one of the first steps for any business proposing to manufacture defence products is to determine the applicable legislative framework through a careful assessment of the products it intends to manufacture. This assessment forms the basis for evaluatin