Under Sitharaman, export growth has slowed while free trade talks with key partners have stalled. In her new role she will have to accelerate Modi’s goal of spending as much as US$250 billion by 2025 on defence hardware, including jet planes, naval ships and drones as bigger neighbour China flexes its military muscle in the region.

Her commerce ministry duties also gave her oversight of Modi’s flagship “Make in India” programme aimed at boosting domestic manufacturing, an initiative that included a significant defence focus.

“Sitharaman’s elevation to defence is a bit of a surprise,” said Shailesh Kumar, a senior Asia analyst with the Eurasia Group risk consultancy, who added that she did not have any particular “breakout” policies in her previous post.

“Her selection is likely aimed at leveraging her experience in the commerce ministry to make defence as much about economics as security.”

While she doesn’t have the political heft of her predecessors including former president Pranab Mukherjee and ex-prime Minister Indira Gandhi, she is known as a hardworking member of Modi’s team and shares a good rapport with the premier.

New Delhi said both sides agreed to withdraw troops from an area near the Indian border that is claimed by both China and India’s ally Bhutan.

Sitharaman takes over amid increased tensions with Pakistan, as well as active insurgencies in India’s east, northeast and in the disputed region of Kashmir.

Sitharaman also inherits a bureaucratic ministry known for equipment procurement delays, oversight of around 1.4 million active armed forces personnel and a politically sensitive portfolio that straddles everything from veterans’ pension issues to national security challenges.

Non-state companies, which have been allowed to compete for orders from the military, are betting her focus on the ‘Make in India’ programme will prompt Sitharaman to accelerate measures to boost local production.

“Sitharaman getting full time charge of defence ministry was much needed in view of the current geopolitical situation,” said Manish Nuwal, managing director at Solar Industries India Ltd., which plans to bid for orders ranging from gun propellants to tank ammunition.

“With her earlier experience in commerce ministry, it will help in increasing private participation in defence sector under the ‘Make in India’ programme”.

That maybe one of her most important tasks as the country’s defence equipment age and deteriorate. India’s enormous army has also grown over the years even as rivals such as China have streamlined and modernised their armed forces.

“Her biggest challenge will come from right-sizing the force structure, procedural hindrances in defence procurement and issues related to self-reliance in defence production,” said Deba Ranjan Mohanty, director at the Indike Analytics, a New Delhi-based defence research organisation, who suggested her “diligence” will help her “quickly pursue reforms” that could help increase localised defence production.

Sitharaman previously worked as a research manager for audit firm Pricewaterhouse in London and has a masters in economics from New Delhi’s Jawaharlal Nehru University.

Her promotion had its critics as export growth has slowed for four straight months to July and free trade deals including with the European Union have been languishing. That means the nation is missing the opportunity to boost manufacturing and employment, a key electoral promise for Modi, who pledged to create enough jobs for one million youth joining the labour force every month.

Modi is “rewarding a failure” said Mohan Guruswamy, chairman of the New Delhi-based Centre for Policy Alternatives. “It takes someone who understands strategy, technology and the operation of the forces to head it.”

While Sitharaman did not respond to numerous calls for comment, she told reporters after her inauguration that “it just makes you feel sometimes that cosmic grace is there”.

Still her access to Modi could help her get the defence ministry into shape.

“She is tough and smart, it’s a good choice,” said Harsh Pant, an international relations professor at King’s College, London.

“But bringing coherence to Indian defence has never been easy. Having this kind of confidence from Modi will certainly go a long way.”

Additional reporting by Agence France-Presse