India’s defence manufacturing landscape is undergoing a structural transformation, supported by renewed government focus on indigenisation, sustained capital allocation, and a surge in major acquisition proposals across the three services.

This multi-year revival, anchored in strong policy reforms and technology adoption, positions the sector for long-term growth and global competitiveness.

Recent Defence Acquisition Council (DAC) approvals worth ₹79,000 Cores signify the government’s continued commitment to expanding domestic production. These clearances follow an upward trajectory in defence capital outlays, which are projected to rise from ₹1,34,300 Crores in FY21 to an estimated ₹2,01,600 Crores by FY27. The sustained boost in capital expenditure reflects India’s broader strategic shift towards self-reliance and innovation-driven defence manufacturing.

The share of domestic procurement within total defence spending continues to climb steadily, reflecting the strengthening capabilities of indigenous players. Import reliance has declined significantly, aided by the maturing ecosystem of local suppliers, private industries, and start-ups participating in the Make and iDEX frameworks.

New policy measures under the forthcoming Defence Procurement Manual (DPM 2025) aim to simplify tendering procedures, cap liquidated damages for domestic suppliers, and extend assured order tenures. These structural reforms are fostering operational stability and cost predictability across public and private sector participants.

As supply chain pressures ease, the sector’s manufacturing efficiency has also improved. Margins remain stable across tier-one and tier-two vendors, supported by technology standardisation and localised component production. The resultant competitive strength enhances India’s ability to secure export contracts across multiple regions.

Key drivers of growth include new-generation missile systems, advanced radar solutions, networked communications, electronic warfare programs, and unmanned aerial systems. These technology-intensive projects, combined with noteworthy indigenous achievements such as the maiden flight of advanced fighter prototypes and accelerated missile test programs, underline India’s evolving industrial maturity.

Despite this progress, the sector faces challenges in streamlining emergency procurements, accelerating project sanctions, and developing a domestic fighter jet engine manufacturing ecosystem. Effective implementation of ongoing technology transfer programs and joint ventures will be crucial to addressing these gaps.

The government’s ambitious objective of achieving ₹50,000 Crores in defence exports by FY29, along with a targeted doubling of export volume from FY25 levels, underscores the growing international competitiveness of Indian platforms. Collaborative development efforts under the TPCR 2025 roadmap are further unlocking opportunities for high-value manufacturing and strategic global partnerships.

BEL continues to maintain a leadership position in strategic electronics and integrated defence solutions. The Indian Army’s ₹30,000 Crores tender for the DRDO-developed QRSAM ‘Anant Shastra’ project designates BEL as the lead system integrator, raising its order book beyond ₹1,00,000 Crores.

The company’s expanding portfolio includes radar systems, communication and encryption networks, EW suites, and anti-drone technologies. Further growth is expected from participation in naval programs such as next-generation corvettes, avionics for the TEJAS MK-1A, loitering munition systems, and export-oriented contracts.

Backed by a projected CAGR of approximately 18% in sales and 17% each in EBITDA and PAT for FY25–28, BEL is well-positioned for consistent earnings growth. Strong order visibility under the TPCR 2025 framework reinforces its strategic importance in India’s defence digitalisation and network-centric warfare initiatives.

HAL’s performance underscores its status as the backbone of India’s aerospace manufacturing ecosystem. With a record order book of 1,89,000 Crores in FY25, nearly twice that of the previous year, and a visible pipeline of an additional ₹1,00,000 Crores, the company is firmly placed for multi-year expansion.

Major revenue drivers include ongoing production of TEJAS MK-1A fighters, the Su-30MKI upgrade program, and serial deliveries of the Light Combat Helicopter (LCH) Prachand. gunship Production of the TEJAS MK-2 fighter is slated for commencement within the next 18–24 months, alongside steady revenue inflows from repair and overhaul contracts totalling approximately ₹20,000 Crores annually.

HAL’s partnership agreement with GE to manufacture the F-414 jet engine in India, with an estimated 80% level of technology transfer, marks a significant milestone in aerospace self-reliance. This transfer will catalyse future engine development for projects such as the Advanced Medium Combat Aircraft (AMCA) and the Twin Engine Deck-Based Fighter (TEDBF).

Revenue and PAT are forecast to grow at 21% and 14% CAGRs respectively over FY25–27. HAL’s EBITDA margins are projected to remain robust at around 29%, supported by deeper indigenisation, cost optimisation, and supply chain rationalisation.

India’s defence sector is at a critical inflection point. Sustained policy momentum, deepening domestic capabilities, and expanding partnership ecosystems collectively signal a durable and scalable transformation.

The increasing participation of private industry, start-ups, and MSMEs in research, manufacturing, and exports indicates that the next decade will cement India’s place among the world’s top defence producers.

IDN (With Agency Inputs)