India’s defence sector has experienced significant growth, with domestic production nearly tripling and exports increasing 21-fold over two decades. A key policy reform allowing 100% private sector participation has driven this transformation, supported by initiatives like “Make in India” and “Aatmanirbhar Bharat.” Notably, defence exports surged by 78% in Q1 of FY 2024-25.
The government has allocated ₹6.2 lakh crore (US$ 73.8 billion) to the Ministry of Defence for 2024-25, signalling a 4.8% YoY increase and underscoring its commitment to strengthening national security. It has set a target for India’s defence exports to reach ₹50,000 crore (US$ 5.9 billion) by 2029-30.
India’s defence sector has witnessed remarkable growth, with production nearly tripling and exports surging by 30 times over the past decade. A transformative policy change in May 2001 allowed 100% private sector participation in a field previously reserved for public sector entities. This decision has led to improvements in production, exports, and employment, making defence a vital contributor to India’s economy. Alongside these advancements, India has reduced its reliance on imports, shifting from a dependency level of 65-70% to achieving 65% domestic manufacturing. However, as the world’s largest importer of defence products and a steadily rising defence expenditure, there remains a pressing need for further enhancement in indigenous capabilities.
Further, the ₹6.22 lakh crore allocation to the Ministry of Defence for the fiscal year 2024-25, marks a 4.7% increase from the previous year and signals the Indian government’s growing emphasis on strengthening national defence.
Defence Minister Shri Rajnath Singh recently stated that India’s defence exports are expected to reach Rs 50,000 crore by 2029-30. The government is taking various steps to support the private sector, thereby positioning India as a global leader in defence innovation and technology. Initiatives like “Make in India” and “Aatmanirbhar Bharat” have driven India towards self-reliance, reduced import dependency, and bolstered domestic manufacturing capabilities.
India’s defence sector has seen record growth in domestic production during FY 2023-24, reaching ₹1.3 lakh crore (US$ 15.4 billion), a remarkable 174% increase from ₹46,429 crores (US$ 5.5 billion) in 2014-15. Notably, 21% of this production now comes from the private sector, and this share is expected to grow further amid ongoing government support and initiatives.
In 2023-24, the private sector’s share in defence production reached its highest level in at least eight years. For FY ’25, the production is set to reach the target of ₹1.7 lakh crore (US$ 20.8 billion). Defence Public Sector Undertakings (DPSUs) remain the largest contributor, accounting for 59% of the total production.
During Q1, FY ’25, defence exports witnessed a significant 78% YoY to reach ₹6,915 crores (US$ 820.7 million) according to the Ministry of Defence. Around 100 domestic companies have been instrumental in driving this expansion. Some popular exported defence hardware includes Dornier-228 aircraft, artillery guns, BrahMos missiles, PINAKA rockets and launchers, radars, simulators, and armoured vehicles.
In FY 2023-24, defence exports hit a record ₹21,083 crore (US$ 2.5 billion), up by 32.5% YoY. The private sector played a pivotal role, contributing 60% to the total exports, while Defense Public Sector Undertakings (DPSUs) accounted for the remaining 40%. Moreover, export authorizations rose from 1,414 in FY 2022-23 to 1,507 in FY 2023-24, reflecting streamlined processes and increasing global demand for Indian defence products.
Other products that makeup India’s export portfolio span a wide range of advanced defence equipment, including bulletproof jackets and helmets (exported to 34 countries), Chetak helicopters, fast interceptor boats, and lightweight torpedoes. Notably, ‘Made in Bihar’ boots are now part of the Russian Army’s equipment, highlighting India’s growing presence in global defence markets and its high manufacturing standards.
The top three defence export destinations for India are the US, France, and Armenia. India’s ALH (Dhruv) helicopters are now deployed in three countries, including for rescue operations in earthquake-affected Nepal and India has manufactured nearly 300 5.5T while offering a 30% cost saving compared to global alternatives. Other significant exports include ammunition (to 9 countries), firearm components (to 23 countries), electronics, vessels, boats, interceptor boats etc.
Key partnerships with nations such as the USA, Israel, France, the UK, Germany, and the UAE have been instrumental in facilitating joint ventures, technology transfers, and co-development projects. These collaborations have not only strengthened India’s defence infrastructure but also provided access to cutting-edge technologies and expertise essential for modernizing its defence manufacturing and operational readiness.
One of the landmark initiatives highlighting this transformation is the Tata-Airbus aircraft facility in Vadodara, inaugurated by Prime Minister Narendra Modi and Spanish Prime Minister Pedro Sanchez. This project underscores the growing role of private companies in shaping India’s new era of defence innovation and self-reliance. This facility will produce 40 C-295 transport aircraft for the Indian Air Force (IAF), with the first unit scheduled for completion by September 2026.
Under the agreement, 40 units will be manufactured in India in partnership with Tata Advanced Systems Limited (TASL), while 16 units will be delivered to the IAF in a ready-to-fly condition from Airbus’ final assembly line in Seville, Spain. The project is expected to create 600 direct jobs, and 3,000 indirect jobs, and provide 3,000 medium-skill employment opportunities, generating more than 42.5 lakh man-hours in the aerospace and defence sector.
Several key projects underscore India’s efforts to significantly enhance its domestic production capabilities. For instance, the HAL Helicopter Factory in Tumakuru, Karnataka, unveiled in 2023, is India’s largest helicopter manufacturing facility, designed to produce the Light Utility Helicopter (LUH), an indigenously developed, highly manoeuvrable, single-engine aircraft. The factory will initially produce 30 helicopters per year, with the capacity to ramp up to 60 and eventually 90 units per year in the future.
Additionally, the government has announced the establishment of two dedicated Defence Industrial Corridors in Tamil Nadu and Uttar Pradesh. They will act as hubs for defence manufacturing, leveraging existing infrastructure and human capital to boost the production of defence equipment and technologies domestically.
Even after significant improvements in domestic defence production and exports, India continues to face certain threats, particularly in terms of its reliance on arms imports. It remains the world’s largest arms importer, accounting for 9.8% of global arms imports between 2019 and 2023. This dependence reflects a strategic vulnerability in its defence procurement.
India’s defence sector is undergoing a significant transformation, propelled by a strong emphasis on innovation, self-reliance, and the Make in India initiative. For India, which is increasingly asserting its diplomatic influence on the global stage with a bold foreign policy, achieving defence indigenization has become an essential priority.
Programs like Innovations for Defence Excellence (iDEX) and Acing Development of Innovative Technologies with iDEX (ADITI) have been pivotal in fostering innovation within India’s defence sector by offering grants of ₹1.5 crore for individual innovators and up to ₹25 crore for startups focused on critical defence technologies. Over the past five to six years, iDEX has played a crucial role in nurturing around 1,000 defence startups, contributing to the country’s efforts in defence indigenization.
By prioritizing deep technology and the effective movement of resources, India is working towards creating advanced defence solutions that will fortify its strategic infrastructure, ensuring both long-term security and continued technological growth.
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