India’s foreign procurement in capital defence purchases has fallen sharply from nearly half of total spending in FY19 to just 12% in FY25, marking a decisive shift toward domestic manufacturing under the Atmanirbhar Bharat program.

This transformation is driven by successive Positive Indigenisation Lists, ring‑fenced budget allocations, and record defence exports, though challenges remain in defining true indigenisation and managing high‑value imports.

India’s foreign procurement in capital defence purchases has dropped dramatically from about 49 per cent in FY19 to roughly 12 per cent in FY25. This decline reflects aggressive indigenisation policies, progressive import embargoes on military hardware, and a major push toward domestic manufacturing under the Atmanirbhar Bharat program. The shift is not only numerical but strategic, signalling India’s determination to reduce dependency on foreign suppliers and build sovereign capabilities.

The Positive Indigenisation Lists have been central to this transformation. Over successive phases, the government has banned the import of hundreds of military items, sub‑systems, and platforms, compelling local production.

The sixth list alone, notified in August 2026, covers 405 strategically important items across air, land, naval, and electronics domains, with an estimated business potential of ₹3,070 crore.

These include line‑replaceable units, sub‑assemblies, spares, and raw materials for platforms such as the Su‑30MKI, TEJAS, T‑72 and T‑90 tanks, BMP‑II, and warships. Once indigenised, these items must be procured from Indian industry, creating opportunities for defence public sector undertakings, private firms, MSMEs, and start‑ups.

Budgetary allocation has reinforced this policy. A substantial share of the domestic modernisation budget is now formally ring‑fenced for procurement from local public and private sector companies. In FY25‑26, capital contracts worth ₹1.82 lakh crore were signed, with nearly 80 per cent of expenditure under the capital acquisition budget directed toward indigenisation. This ensures predictable demand for Indian firms and encourages investment in capacity expansion and innovation.

India’s rise in defence exports has been equally striking. As local manufacturing capacity scales up, exports have surged multi‑fold to record highs, moving India from a pure buyer model to a supplier of hardware and sub‑systems globally.

Defence exports are now valued at over ₹38,000 crore annually, with Indian systems reaching more than 80 countries. This includes missiles, radars, electronic warfare equipment, and naval platforms, positioning India as a credible player in the global defence market.

Yet nuances and challenges remain. Critics argue that the definition of indigenous production is sometimes stretched. Early‑stage domestic manufacturing often relies heavily on imported kits, sub‑assemblies, or licensed assembly, a practice colloquially termed “screwdrivergiri.” True indigenisation requires deeper component‑level research and development, which is still evolving. 

Moreover, landmark big‑ticket foreign acquisitions, such as advanced fighter jets or submarines, continue to capture public attention and media debate, even as aggregate capital spending shifts down in percentage terms.

The Defence Procurement Manual 2025 has further streamlined procedures, simplified licensing, and relaxed penalties for indigenisation delays, encouraging private sector participation. The SRIJAN Defence Portal has facilitated the offer of more than 33,000 items for indigenisation, with over 15,700 successfully developed, resulting in import substitution worth ₹9,000 crore. Defence stocks have rallied in response, with companies like HAL, GRSE, Paras Defence, and Zen Technologies gaining investor confidence.

India’s trajectory is clear. By combining policy reforms, budgetary support, and industrial participation, the country is steadily reducing foreign procurement while expanding domestic manufacturing and exports.

The challenge ahead lies in deepening technological self‑reliance, ensuring that indigenisation moves beyond assembly to genuine innovation, and balancing the need for selective foreign acquisitions with the broader goal of strategic autonomy.

Agencies