The tire used in my spare tire kit appears to have an indentation on the sidewall. Is this a defect?

If the indentation in the tire sidewall is similar to what is described below, it is not a defect and is a common characteristic of radial tire construction. Read further for more details.

The image shown here is a good representation of a sidewall undulation of a radial tire.

Radial tires are constructed in a way that may result in an indentation on the tire sidewall. This can be unnerving to the vehicle owner as it would appear to be a defect in the tire. 

Thankfully, this is not a defect but a normal occurrence and a common characteristic of radial tire construction. The reinforcing cords that transverse the tire tread from bead to bead have a joining point. The location can make the sidewall more rigid, causing this indent. 

Rest assured, this is a normal characteristic of radial tires. It is more noticeable on tires with taller and more pliable sidewalls. 

Further resources and info can be found here - Radial Tire Undulations.