Defence Public Sector Undertakings (DPSUs) are a type of government-owned enterprise under the administrative control of the Department of Defence Production (DDP) in the Ministry of Defence (MoD), Government of India. The DDP was set up in November 1962 to be responsible for defence production and the indigenisation of imported stores, equipment, and spares. The DPSUs were established in phases to assume the role of designer and integrator of defence weapons and equipment, solving the problem of heavy reliance on foreign imports and aiming for self-reliance in defence production.
India currently has 17 DPSUs, including the nine older ones like Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), and Mazagon Dock Shipbuilders Limited (MDL), which produce items ranging from aircraft and warships to missiles and electronic devices. The mechanism of their operation involves producing equipment either by indigenising technology developed by the Defence Research & Development Organisation (DRDO) or by absorbing a Transfer of Technology from foreign vendors. DPSUs collectively form the backbone of India's indigenous defence manufacturing capability and account for over 65 per cent of the total industrial output of all defence public sector enterprises.
A significant recent change occurred in October 2021 with the corporatisation of the four-decade-old Ordnance Factory Board (OFB). The 41 factories under the OFB were dissolved and amalgamated into seven new DPSUs, such as Munitions India Limited and Armoured Vehicles Nigam Limited, to overcome issues like high costs and inconsistent quality. This move connects to the broader national goals of 'Aatmanirbhar Bharat' (self-reliant India) and the 'Make in India' initiative, which also involves the Defence Acquisition Procedure (DAP 2020) that prioritises Indian vendors. DPSUs also co-founded the Defence Innovation Organisation (DIO), which manages the iDEX (Innovations for Defence Excellence) framework to engage startups and MSMEs in the defence ecosystem.