India’s defence sector is entering a transformative phase with the rollout of the Defence Procurement Manual (DPM) 2025, the first comprehensive update since 2009.

This policy overhaul is designed to modernise acquisition frameworks, boost transparency, and accelerate procurement timelines, aligning with India’s goal of achieving self-reliance in defence production.

Policy Framework And Budget Allocation

The government has earmarked ₹3,000 crores specifically for smaller platforms and micro, small, and medium enterprises (MSMEs) under initiatives like iDEX (Innovations for Defence Excellence). This allocation highlights an increased focus on tapping into indigenous innovation and nurturing start-ups and smaller manufacturers within the defence ecosystem. Over the past three years, domestic procurement has surged from ₹71,000 crores to ₹1,20,000 crores, reflecting steady sectoral expansion at a 16–17% compound annual growth rate (CAGR).

Public Sector Momentum

Public sector defence enterprises continue to demonstrate robust performance under the new ecosystem. Bharat Electronics Limited (BEL), India’s premier defence electronics manufacturer, expects its order intake to surpass ₹1 lakh crore in FY2025–26. BEL’s revenue trajectory shows a consistent 14–15% growth projected over the next three to four years, backed by stronger domestic orders and new export opportunities.

Similarly, Hindustan Aeronautics Limited (HAL) maintains a 13–14% CAGR outlook over a five-to-seven-year period. Despite supply chain vulnerabilities related to imported aero-engine components, HAL continues to sustain production and integration efficiency across major aircraft programs such as the TEJAS MK-1A, HTT-40, and upcoming AMCA variants.

Rise of Private Defence Firms

The 2025 manual’s emphasis on simplifying procurement procedures is proving particularly advantageous for smaller private defence firms. In particular, companies specialising in electronics and radar systems are experiencing rapid expansion.

Astra Microwave and Apollo Micro Systems, both strong players in radar and electronic warfare subsystems, have recorded impressive 30–40% CAGR in recent years.

Their financials report doubled profits and expanded operating margins, largely due to increased demand for indigenously sourced components and subsystems in satellite communications, missile electronics, and sensor arrays.

This surge represents a broader structural shift toward integrating smaller industry actors into the defence value chain, aligning with the government’s Make in India and Atmanirbhar Bharat missions.

Strategic Implications of DPM 2025

The Defence Procurement Manual 2025 introduces procedural streamlining across acquisition stages—from tendering and vendor evaluation to quality assurance and delivery compliance. The objective is to cut red tape and allow faster contract awards, particularly for indigenous firms with proven R&D capacity. The manual also places a premium on life-cycle cost evaluation, indigenous content mandates, and greater transparency through digital contracting platforms.

Industry-Wide Impact

By bridging policy and procurement reforms, DPM 2025 is expected to foster deeper collaboration between public sector undertakings (PSUs), private industry, and MSMEs. This tripartite framework aims to decentralise supply chains, strengthen domestic manufacturing clusters, and enhance the country’s defence readiness while lowering long-term import dependency.

Additionally, the manual’s updated structure corresponds with India’s strategic goal of elevating its defence exports from the current ₹21,000 crore level to about ₹50,000 crore by the early 2030s. Streamlined processes and predictable procurement cycles will further reduce lead times, boosting the competitiveness of Indian defence products in international markets.

Future Outlook

Looking ahead, the ecosystem is expected to mature into a hybrid model of synergistic public-private collaboration, where innovation from emerging MSMEs complements the scalability of major PSUs. The focus on smaller platforms, electronic systems, and niche technologies will enable India to diversify its defence capabilities across domains—land, sea, air, and space.

Over the next five to ten years, the interplay between increased government support, a modernised acquisition framework, and a thriving industrial base is set to redefine India’s standing in the global defence economy—positioning it not just as a major importer but as a competitive producer and exporter of advanced military technologies.

Agencies