Artificial Intelligence in Defence Project Management: Challenges and Opportunities for Indian PSUs

Abstract

The integration of Artificial Intelligence (AI) in defence project management represents a paradigm shift for Indian Public Sector Undertakings (PSUs), offering unprecedented opportunities while presenting significant challenges. This study examines the current state of AI adoption in Indian defence PSUs, analyzing challenges related to technology implementation, resource allocation, and organizational readiness, while evaluating opportunities for enhanced AI integration. Through comprehensive mixed-methods analysis of 12 major defence PSUs including HAL, BEL, and DRDO subsidiaries, utilizing secondary data from 2019-2024, statistical analysis, and comparative assessment of AI implementation patterns. The research tests four hypotheses regarding funding constraints, talent migration impacts, bureaucratic barriers, and partnership effectiveness in AI adoption. Findings reveal that while India allocated ₹621,940 crore for defence in 2024-25, only 3.84% was designated for R&D activities. The analysis indicates 79.2% of defence production is PSU-dominated, yet AI implementation remains nascent with annual spending of $50 million versus China's $1.6-2.7 billion. Key challenges include talent migration (200+ engineers from HAL in 2022-24), inadequate infrastructure, and bureaucratic delays, while opportunities exist through DAIPA initiatives, 75 AI technologies launched in 2022, and strategic partnerships. Successful AI integration requires 300% funding increase, enhanced public-private partnerships, streamlined governance, and comprehensive workforce development to maintain competitive advantage in global defence markets.