Private sector companies accounted for a larger share of defence production in 2023-24 than has been seen in at least eight years

Even as defence exports have reached record levels, an analysis of the Department of Defence Production data shows that private sector companies accounted for ₹16,411 crore, or 22 per cent share in the total defence production of ₹74,739 crore in 2023-24 (FY24). This is their largest share in data going back to 2016-17. The latest data is as of March 5.

Despite a decrease from the previous fiscal year's ₹21,083 crore, which accounted for 19 per cent of the total, private sector defence production in FY24 saw a higher share due to a lesser decline compared to overall numbers. The total defence production in India for FY24 was ₹74,739 crore, down from ₹1.09 trillion in the previous year. Other segments contributing to defence production include the Ordnance Factory Board, defence public sector undertakings (PSUs), other PSUs, and joint ventures.

The government has been actively promoting higher defence production within the country. Defence Minister Rajnath Singh announced in November a reservation of ₹1 trillion, or 75 per cent of the defence acquisition budget, for local companies. Additionally, the defence offset policy aims to boost the local industry by requiring foreign companies to spend a portion of their orders locally through investments in domestic firms or purchases from them.

Record High Defence Exports

India's defence exports reached a record high of ₹21,083 crore in FY24, up from ₹15,920 crore in FY23, according to the Ministry of Defence. The total value of defence offset was $7.9 billion as of FY24, nearly tripling from $2.9 billion in 2019-20. However, there are still claims worth roughly $310 million yet to be processed, which may be stuck due to incomplete information or other reasons.

Investments In Defence Corridors

The private sector is also investing in new defence production facilities, particularly in the Uttar Pradesh and Tamil Nadu defence corridors. The Uttar Pradesh defence corridor has received ₹25,397 crore in investment announcements, including small arms manufacturing in Kanpur and a new facility at Noida for electro-optics. Similarly, investments in the Tamil Nadu defence corridor worth ₹11,821 crore include facilities for protective gears, photonics, thermal imaging, and aerospace components.

(With Agency Inputs)