India’s defence industry has reached a historic inflection point, with production hitting ₹1.78 lakh crore in FY 2025‑26 and exports surging to ₹38,424 crore, a 56‑fold rise since 2013‑14, as reported by Times of India.

Private industry now contributes nearly half of exports and a record 24% of production, signalling a structural shift away from PSU dominance.

India’s defence manufacturing sector has undergone a dramatic transformation over the past decade, steadily reducing import dependence while building genuine domestic capability. Production touched a record ₹1.78 lakh crore in 2025‑26, up 15.6% from the previous year’s ₹1.54 lakh crore, and more than double the ₹84,643 crore recorded in 2020‑21.

Back in 2013‑14, output was only ₹43,746 crore, underscoring the steep trajectory of growth. The government has set an ambitious target of ₹3 lakh crore in annual production and ₹50,000 crore in exports by 2029.

This expansion has been underpinned by a defence budget that has more than tripled since 2013‑14, rising from ₹2.53 lakh crore to ₹7.85 lakh crore in 2026‑27. Capital expenditure, which funds acquisition and development of new platforms, has climbed even more sharply, more than doubling from ₹94,587.95 crore in 2014‑15 to ₹2.19 lakh crore in 2026‑27. This allocation directly finances military modernisation rather than routine running costs.

Exports have become the standout metric. From a modest ₹686 crore in 2013‑14, defence exports have grown more than 56 times, reaching ₹38,424 crore in FY 2025‑26. This represents a 62.66% jump from the previous year’s ₹23,622 crore, with Indian‑made defence products now reaching over 80 countries. 

Some sources note that the reach has expanded to more than 100 countries, with deals such as the ₹3,800 crore BrahMos missile export to Indonesia highlighting India’s credibility as a supplier.

Private industry’s role is particularly striking. Firms contributed ₹17,353 crore, or 45.16%, of exports, nearly matching the ₹21,071 crore, or 54.84%, from Defence Public Sector Undertakings.

In overall production, PSUs accounted for 76% of output, while the private sector’s share climbed to its highest level yet at 24%, contributing roughly ₹42,000 crore. This marks a major structural shift from PSU dominance to a more balanced ecosystem.

The strategic implications are profound. Lt Gen PR Shankar (Retd) has emphasised that self‑reliance in defence is an insurance against defeat and a guarantor of victory. A larger domestic manufacturing base shortens replenishment timelines, enables rapid repair and scaling during crises, and reduces vulnerability to sanctions or supply disruptions. Recent conflicts in West Asia and Eastern Europe have demonstrated the importance of such resilience.

Procurement reforms have reinforced this momentum. The Defence Acquisition Council has cleared Acceptance of Necessity for more than ₹6 lakh crore worth of DRDO‑designed systems to be manufactured domestically.

Major programs include orders for 97 Tejas Mk‑1A fighters worth around ₹62,000 crore and 156 Light Combat Helicopter Prachand gunships valued at ₹62,700 crore. Policy frameworks such as the Defence Procurement Procedure 2016, Defence Acquisition Procedure 2020, Defence Procurement Manual 2025, and the forthcoming DAP 2026 have progressively strengthened indigenous procurement and streamlined acquisition categories.

Innovation has been deliberately fostered. The iDEX scheme has engaged 676 start-ups, MSMEs and innovators, resulting in 551 design and development contracts by March 2026, backed by ₹498.78 crore.

The ADITI scheme added ₹750 crore for 2023‑24 through 2025‑26 to support critical technology development. The Technology Development Fund offers grants of up to ₹50 crore per project, with 80 projects worth ₹334 crore under implementation and an additional ₹500 crore corpus for deep technologies.

DRDO has expanded technology transfer through its Development cum Production Partner framework, signing 2,180 agreements and opening more than 2,780 intellectual property rights to industry.

Ten Positive Indigenisation Lists have identified 5,521 items for domestic sourcing, while the Srijan Defence Equipment Empowerment Platform has connected over 41,000 vendors and 2.7 lakh products. Defence R&D allocation has risen from ₹13,716.14 crore in 2014‑15 to ₹29,100.25 crore in 2026‑27, with 25% of the budget opened to industry, start-ups and academia.

The results are visible in inventories. The Army has achieved around 91% self‑sufficiency in ammunition, indigenising 159 of 175 variants. This achievement is critical for sustaining prolonged operations. The sector now spans design, research, testing, production, maintenance, upgrades and exports as a connected ecosystem, strengthening strategic autonomy and reducing vulnerability to external shocks.

Agencies