India’s defence sector is moving into a more ambitious stage of development after spending the past decade establishing a stronger domestic industrial base, expanding private-sector participation and increasing its presence in international markets.

The focus is now shifting beyond capacity creation towards the development of sustainable capability, technological innovation and long-term global competitiveness.

The scale of this transformation is evident in recent figures. India’s defence production reached a record ₹1.78 lakh crore in FY2025-26, while defence exports climbed to ₹38,424 crore, with Indian-made military equipment now reaching more than 80 countries. The government has set a target of achieving annual defence production worth ₹3 lakh crore and exports of ₹50,000 crore by 2029.

Those goals represent a significant evolution in policy thinking. The challenge is no longer limited to building a domestic manufacturing base. Instead, the emphasis has moved towards creating an industry capable of innovating, scaling and competing successfully in both domestic and international markets.

India’s defence ecosystem today spans Defence Public Sector Undertakings, private industry, MSMEs, technology companies, research organisations and the armed forces. The private sector contributed 24% of total defence production during FY2025-26, its highest share to date, while accounting for 45.16% of exports, highlighting its growing importance in the country’s defence-industrial landscape.

The next stage of growth will depend on strengthening supply chains, increasing investment in specialised technologies and fostering deeper cooperation between large manufacturers, smaller suppliers, academia, research institutions and military users.

Success will require far more than higher production volumes. Indian firms must develop specialised expertise and globally competitive capabilities that can withstand international competition and secure repeat export business.

Technology and innovation are expected to define this next phase. As military requirements evolve rapidly due to advances in autonomous systems, artificial intelligence, networking technologies and precision warfare, continuous investment in research and development has become increasingly important.

To support this transition, the government increased defence research and development funding to ₹29,100.25 crore for 2026-27, more than double the allocation recorded in 2014-15. Simultaneously, ₹1.39 lakh crore has been earmarked within the defence budget for procurement from domestic industry, creating substantial opportunities for Indian manufacturers.

However, the critical challenge lies in converting laboratory research into operational systems that can be deployed by the armed forces and marketed internationally. Several indigenous weapon systems already demonstrate that transition from development to operational capability.

The BrahMos supersonic cruise missile remains India’s flagship defence export success story. Developed through the India-Russia joint venture, the missile has progressed from a headline-grabbing export breakthrough to an increasingly credible long-term export product, attracting customers and interest across multiple regions.

The Astra beyond-visual-range air-to-air missile and the Pinaka multi-barrel rocket launcher family have followed a similar trajectory. The guided extended-range Pinaka variant has generated growing international attention, while Armenia has already acquired the system.

Meanwhile, strategic missile production is increasingly opening to private industry participation. Future programmes such as ASTRA MK-2 and the Pralay tactical ballistic missile could form key components of India’s proposed Integrated Rocket Force while supporting a broader indigenous missile manufacturing ecosystem.

The air-defence segment reflects the same pattern of indigenous development and industrial maturity.

The Akash surface-to-air missile system, together with the Akash Prime and Akash-NG variants, highlights the ability of Indian organisations to develop, manufacture and upgrade sophisticated defence systems through cooperation between DRDO, Bharat Dynamics Limited and Bharat Electronics Limited.

Akash has already secured international customers, demonstrating that indigenous programmes can achieve commercial success beyond India’s borders.

Equally important is the digital architecture that supports such weapons.

Akashteer, the indigenous AI-enabled air-defence control and reporting system developed by Bharat Electronics with support from DRDO and ISRO, integrates sensors, radars and weapon platforms into a unified operational network. Its performance during recent operations has reportedly generated international interest, including from the UAE.

More significantly, Akashteer illustrates India’s growing expertise in C5ISR capabilities, encompassing command, control, communications, computers, cyber, intelligence, surveillance and reconnaissance systems. Its ability to connect with the Indian Air Force’s Integrated Air Command and Control System and the Indian Navy’s TRIGUN network demonstrates progress towards creating a fully networked force capable of integrating equipment sourced from different countries into a single operational framework.

This networking capability may ultimately prove as valuable as individual missile or weapons systems.

Such architecture is being created across the defence ecosystem, with DRDO providing core technological frameworks, public-sector enterprises handling integration and production, and private firms supplying critical communications infrastructure.

Companies such as Avantel are contributing through satellite communications terminals, software-defined radios, high-frequency communication systems and ground-segment infrastructure that enable continuous data exchange between ships, aircraft, ground stations and command headquarters.

This digital backbone is increasingly becoming the connective tissue that transforms individual military platforms into integrated combat networks. Such capabilities are likely to become important export offerings in their own right as modern armed forces seek comprehensive solutions rather than isolated equipment purchases.

Export growth to ₹38,424 crore demonstrates rising international confidence in Indian defence products. Sustaining that momentum will require consistent performance in technology, quality, reliability, affordability and long-term customer support.

Indian manufacturers must increasingly focus on building enduring relationships with customers through partnerships, product upgrades, maintenance support, training arrangements and internationally recognised certifications.

The coming decade will also demand deeper investment in human capital and innovation. Stronger collaboration between industry, universities, Start-Ups, research laboratories and the armed forces will be essential to accelerate the movement of new technologies from concept to deployment.

Policy reforms are expected to support that effort. The draft Defence Acquisition Procedure 2026 proposes measures aimed at strengthening indigenous design capabilities, increasing domestic content requirements and creating a more favourable environment for innovation-driven procurement.

Ultimately, India’s objective extends beyond producing larger quantities of military equipment.

The broader aim is to establish a self-sustaining defence ecosystem capable of continuously generating new technologies, improving existing systems and delivering advanced capabilities to both domestic and international customers.

After spending a decade constructing the foundations of a domestic defence-industrial base, India is now entering a period where success will be measured by innovation, technological sophistication and global competitiveness.

The country has already demonstrated that it possesses the manufacturing scale required to compete internationally. The next challenge is transforming that scale into enduring capability through advanced technology development, highly skilled talent, stronger industrial partnerships and deeper access to global markets.

If these elements align successfully, India’s future defence standing will be determined not merely by how much equipment it produces, but by how effectively it innovates, scales and competes on the world stage.

Agencies