India is rapidly strengthening its defence capabilities. Over the past few years, the country has made remarkable progress in defence manufacturing, with significant contributions from both the public and private sectors. In FY25-26, India’s defence production reached a record Rs 1.78 lakh crore, reflecting the country’s growing industrial capacity and its strengthening position in the global defence supply chain.
Over the last five years, defence production has more than doubled, while over the past decade, it has grown nearly fourfold. This is not just a temporary surge but a major structural shift towards making India self-reliant in the defence sector.
Let us understand the reasons behind this rapid growth and the opportunities it is creating for the industry and investors.
What’s Happening?
According to the Ministry of Defence, India’s defence production reached a record Rs 1.78 lakh crore in FY25-26, which is 15.6% higher than the previous year’s Rs 1.54 lakh crore. In FY20-21, this figure stood at Rs 84,643 crore, meaning production has increased by 110% over five years. Meanwhile, compared to Rs 43,746 crore in FY13-14, indigenous defence production has nearly quadrupled.
Defence Minister Rajnath Singh described this achievement as the result of the collective efforts of Prime Minister Narendra Modi’s leadership, the Department of Defence Production, and the industry. This milestone also reflects the progress of the ‘Atmanirbhar Bharat’ initiative, which aims to reduce dependence on defence imports and promote domestic manufacturing.
Increasing Participation of the Private Sector
The role of private companies in India’s defence manufacturing sector is steadily expanding, reflecting growing industry confidence in the sector. In FY25-26, Defence Public Sector Undertakings (DPSUs) and other government entities contributed approximately 76% of total production, while the private sector’s share rose to 24%, its highest level so far. In FY24-25, the private sector’s share stood at 22%.
At the same time, the total contribution from private companies reached a record level of approximately Rs 42,000 crore.
Defence Minister Rajnath Singh credited this achievement to the government’s focus on indigenous manufacturing and the leadership of Prime Minister Narendra Modi. According to him, this growth reflects the expansion of India’s defence industrial base, with the Department of Defence Production, public sector companies, and private industry all playing important roles.
New Heights in Defence Exports
The rapid growth in indigenous defence production is also positively impacting exports. In FY25-26, India’s defence exports reached a record Rs 38,424 crore, nearly 55 times higher than in 2014. According to the Ministry of Information and Broadcasting, Indian defence equipment is now being exported to more than 80 countries, reflecting India’s growing acceptance and competitiveness in the global market.
Defence Minister Rajnath Singh has expressed confidence that this momentum will continue, supported by policies that promote indigenous manufacturing and exports. According to him, continuous policy support, new initiatives, increasing private sector participation, and stronger export capabilities will help take both defence production and exports to new heights in the coming years.
What Does This Mean for Investors?
The rapid growth of the defence sector signals long-term opportunities for investors. The private sector’s share rising to 24% shows that defence production is no longer limited to government-owned companies. The private sector’s contribution of nearly Rs 42,000 crore is creating significant opportunities for businesses operating across the defence supply chain.
Additionally, record exports of Rs 38,424 crore are a positive indicator for companies whose products can compete in global markets. Government policy support, the Atmanirbhar Bharat initiative, and growing export potential could provide a strong foundation for the sector’s long-term development.
What’s Next?
India’s defence sector could grow at an even faster pace in the coming years. The Ministry of Defence has accelerated the procurement of indigenous weapons, drones, missiles, helicopters, and air defence systems. Recently, the Defence Acquisition Council (DAC) approved procurements worth more than Rs 3.84 lakh crore, including missiles, electronic warfare systems, drones, artillery, armoured vehicles, and air defence platforms.
In addition, priority is being given to 156 Prachand Light Combat Helicopters for the Army and Air Force, the expansion of drone fleets, counter-drone systems, and various naval platforms.
India’s missile manufacturing ecosystem is also strengthening rapidly. Supplies have begun from the BrahMos Integration and Testing Facility in Lucknow, while the Rs 15,900 crore ammunition indigenisation programme is expected to significantly reduce import dependence by 2027-28.
In FY24-25, 193 defence contracts worth more than Rs 2.09 lakh crore were signed, with 92% of the orders awarded to domestic companies. Record production, rising exports, strong private sector participation, and a massive order pipeline indicate that India’s defence industry has entered one of its biggest growth phases since independence.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
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