India’s defence sector has witnessed a transformative shift towards self-reliance by reducing dependency on imports and emphasising indigenous manufacturing. Ongoing wars across various parts of the world have not only prompted India to increase its defence budget but have also reinforced the importance of manufacturing defence products under the ‘Make in India’ initiative. Not only has India’s defence production grown significantly, but exports have also surged 30 times, with indigenous defence goods now being exported to over 100 countries.
Let’s break down this growth and explore whether there are investment opportunities in this evolving sector.
What’s Happening?
India achieved its highest-ever defence production in the financial year 2023–24. The total value of defence production reached Rs 1,27,265 crore — a massive 174% increase compared to Rs 46,429 crore in 2014–15.
Interestingly, 65% of defence equipment is now manufactured in India — a significant shift from the past, when 65–70% of defence requirements were met through imports. This highlights India’s reduced dependency on foreign suppliers and its strengthened indigenous capabilities.
India recorded a 174% jump in defence production, rising from Rs 46,429 crore in FY15 to a record Rs 1.27 lakh crore in FY24.
The ‘Make in India’ initiative has played a major role in boosting local defence production. India is now manufacturing advanced military equipment, including the Dhanush Artillery Gun System, Advanced Towed Artillery Gun System (ATAGS), Light Combat Aircraft (LCA) Tejas, and naval assets such as destroyers, indigenous aircraft carriers, submarines, and more.
Defence Exports Surged 30x
A decade ago, India relied heavily on imports for defence needs. Today, it’s making headlines for its soaring defence exports. Over the past ten years, exports have skyrocketed from Rs 686 crore in FY 2013–14 to Rs 21,083 crore in FY 2023–24 — marking a staggering 30-fold increase.
Not just defence production — India’s defence exports have surged 21 times over the past decade.
Between 2004 and 2014, total defence exports stood at Rs 4,312 crore. In the following decade (2014–24), they soared to Rs 88,319 crore, representing a 21-fold jump. On a year-on-year basis, exports rose by 32.5%, increasing from Rs 15,920 crore in FY 2022–23 to Rs 21,083 crore in FY 2023–24.
Currently, India exports defence equipment to over 100 countries, with the USA, France, and Armenia being the top buyers in 2023–24.
Defence Sector Index: Rallied Nearly 25% from the Lows
The Nifty India Defence Index measures the performance of a portfolio of stocks representing the defence sector. After peaking at 7,075.65 on December 17, 2024, it underwent a correction along with the broader market. From its low of 5,025.35 on March 3, 2025, it has rallied by nearly 25%, indicating renewed investor interest at lower levels. However, as of April 11, 2025, the index has delivered a year-to-date return of -3.46%.
What’s in it for Investors?
India’s defence sector holds strong long-term investment potential, supported by increasing defence budgets, growing private participation, and a continued push for self-reliance under initiatives like Make in India and Atmanirbhar Bharat. With rising production, record exports, and ambitious targets set for 2029, the sector is on a growth trajectory.
In FY 2024–25 alone, the Ministry of Defence signed a record 193 contracts worth over Rs 2.09 lakh crore — nearly double the previous high. Notably, 92% of these contracts were awarded to Indian firms, reinforcing the focus on local manufacturing and strengthening the domestic industry.
What’s Next?
The government has set an ambitious goal of Rs 50,000 crore in defence exports and Rs 3 lakh crore in total defence production by 2029. These targets will not only solidify India’s position as a global defence manufacturing hub but also drive broader economic growth.
Private companies will play an increasingly important role, currently contributing 21% to total defence production — a figure expected to rise. With a growing defence budget and a strong focus on indigenous manufacturing, Indian defence companies are well-placed to benefit from the sector’s next phase of expansion.
*This article is for informational purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
