India’s Defence Industry Takes Flight, but Can It Sustain Its Momentum?

India’s domestic defence industry has made astonishing progress over the past decade. The country has significantly reduced its dependence on imported defence systems through increased spending, changes in procurement policy, growing private sector participation, and greater investment in research and development.

This transformation reflects a fundamental shift in India’s approach to national security. By prioritizing indigenous manufacturing, India is taking control of its military capability and freeing itself from overseas suppliers. This has significant implications for the nation’s great power aspirations.

Defence production figures are staggering. In 2025-26, output reached Rs 1.78 lakh crore, a 15.6% increase from the previous year. Since 2013-14, this figure has more than doubled to Rs 43,746 crore. The growth trajectory is unmistakable.

The defence budget has more than tripled since 2013-14, rising from Rs 2.53 lakh crore to Rs 7.85 lakh crore in 2026-27. Capital expenditure, which finances military modernization, has climbed sharply and doubled from Rs 94,587.95 crore in 2014-15 to Rs 2.19 lakh crore in 2026-27.

Defence exports have grown dramatically. From Rs 686 crore in 2013-14, they reached a record Rs 38,424 crore in the last financial year, with a growth rate of 62.66% over the previous year. Indian-made defence products are now exported to over 80 countries.

Private firms play a significant role in this growth story, accounting for nearly half of India’s exports. They contributed an estimated Rs 17,353 crore to these figures in 2025-26 alone. This marks a considerable shift from the earlier defence sector, which was dominated by government-run entities.

Defence Public Sector Undertakings (PSUs) and public entities account for around 76% of total output, while private companies have increased their share to 24%. This growth reflects India’s commitment to self-reliance in defence.

Lt. Gen PR Shankar’s assertion that military capability is a matter of men and material in the correct mix resonates with these developments. In today’s global environment, where extended conflicts highlight the importance of domestic manufacturing capacity, India’s push towards indigenous defence production has become critical.

Private entities are helping to increase production numbers and exports. This push has reshaped procurement, with the Defence Acquisition Council (DAC) clearing Acceptance of Necessity (AoN) for more than Rs 6 lakh crore worth of systems designed by DRDO and manufactured by Indian industry. Some notable programmes involve combat aircraft and helicopters, including the second order for 97 Tejas Mk-1A fighters worth around Rs 62,000 crore.

Procurement reforms have evolved over the years, with the Defence Procurement Procedure of 2016 laying groundwork for greater emphasis on domestic manufacturing. The Defence Acquisition Procedure of 2020 strengthened indigenous procurement and expanded opportunities for Indian companies across design, development, and production. These efforts aim to streamline nearly Rs 1 lakh crore worth of revenue procurement.

Private industry and innovation will play a crucial role in paving the road ahead for India’s defence sector. Startups and smaller innovators are being encouraged to participate in this growth story. This synergy has the potential to propel India towards greater self-reliance in defence, enabling it to stay at the forefront of military capability.

However, as India continues to soar in its defence production capabilities, a critical question remains: can it sustain this momentum? The country’s great power aspirations depend on it.