Over the past decade, India’s defence sector has undergone a structural transformation. A country historically dependent on overseas suppliers for many sophisticated military systems is increasingly designing, manufacturing and exporting weapons, platforms, components and defence technologies from its own industrial base.
The numbers illustrate the scale of the change. Defence production rose from about ₹46,429 crore in FY2014-15 to a record ₹1.78 lakh crore in FY2025-26. Defence exports, meanwhile, increased from just ₹686 crore in FY2013-14 to ₹38,424 crore in FY2025-26.
This transformation is about more than higher production. India has been attempting to build something strategically more important: a domestic defence-industrial ecosystem capable of supporting its armed forces during crises while establishing India as a credible supplier in the international arms market.
The India of 2014: A Military Heavily Dependent on Imports
For decades, one of the contradictions of India’s strategic position was clear. India possessed one of the world’s largest armed forces and had considerable domestic scientific capabilities, yet remained heavily dependent on foreign suppliers for major military platforms, engines, sensors, weapons and critical components.
Russia and the Soviet Union historically supplied much of India’s military inventory, while India also procured important systems from France, Israel, the United States and other countries.
This created several strategic vulnerabilities.
Foreign dependence could mean longer procurement cycles, exposure to geopolitical pressure, difficulties obtaining spare parts during international crises, foreign-exchange costs and continuing dependence on overseas manufacturers for upgrades and maintenance.
India therefore needed to move beyond simply buying weapons toward developing the capability to design, manufacture, maintain and eventually export them.
That became a central objective of the Make in India and later Atmanirbhar Bharat strategies.
1. The Explosion in Domestic Defence Production
The most visible evidence of the transformation is production.
India’s annual defence production reached approximately ₹1.78 lakh crore in FY2025-26, compared with ₹43,746 crore in FY2013-14—nearly a fourfold increase. Production grew 15.6% in FY2025-26 alone compared with the previous fiscal year.
This means India’s defence manufacturing ecosystem is no longer limited primarily to traditional government-owned factories.
It increasingly includes:
DPSUs + DRDO + major private companies + MSMEs + start-ups + universities and research institutions.
The private sector accounted for approximately 24% of defence production in FY2025-26, or roughly ₹42,000 crore, according to the Ministry of Defence.
That diversification could prove just as important as the increase in overall production.
2. From ₹686 Crore to ₹38,424 Crore in Defence Exports
The transformation in exports has been even more dramatic.
In FY2013-14, India’s defence exports stood at only ₹686 crore. By FY2024-25, they had reached a then-record ₹23,622 crore—roughly 34 times the 2013-14 level.
The latest government figures show another major jump: defence exports reached ₹38,424 crore in FY2025-26.
That represents a profound change in India’s defence posture.
India is no longer thinking only in terms of:
“Make in India for India.”
The strategy is increasingly:
“Make in India, Make for the World.”
By late 2025, the government said Indian defence products were being supplied to around 80 countries, spanning ammunition, weapons, subsystems, complete systems and components.
3. Private Industry Has Become a Major Player
Another major transformation has been the emergence of private defence manufacturers.
Historically, India’s defence production system was dominated by government organisations such as DRDO, defence public-sector undertakings and the former Ordnance Factory Board.
Today companies such as Tata, Larsen & Toubro, Bharat Forge, Mahindra Defence, Adani Defence, Alpha Design and numerous specialised manufacturers participate across different parts of the defence supply chain.
This matters because modern defence manufacturing requires enormous networks of suppliers.
A fighter aircraft, warship, missile or artillery system requires thousands of individual components and technologies. Consequently, building a sustainable defence industry requires far more than a few large government factories.
The government said in 2025 that approximately 16,000 MSMEs were participating in India’s defence ecosystem.
India is therefore gradually creating a defence manufacturing pyramid:
Large system integrators
↓
Specialised manufacturers
↓
MSMEs
↓
Start-ups
↓
Component and technology suppliers
That ecosystem is essential if India wants indigenous defence production to become sustainable rather than dependent on individual flagship programmes.
4. The Positive Indigenisation Lists Changed Procurement
One of the most consequential policy interventions has been the introduction of Positive Indigenisation Lists.
Rather than allowing certain defence products to continue being imported indefinitely, the government identified equipment and components that should progressively be sourced domestically.
By early 2025, the government reported that more than 5,500 items were covered by these lists and approximately 3,000 had already been indigenised.
The items cover technologies ranging from components to sophisticated military equipment.
This created something Indian defence manufacturers had historically struggled to obtain:
predictable domestic demand.
If Indian companies know that the armed forces intend to procure particular categories domestically, they have a stronger commercial incentive to invest in manufacturing capacity, R&D and supply chains.
5. India Started Reserving Defence Procurement for Indian Industry
Another important reform involved the defence capital procurement budget.
Instead of allowing most major acquisition expenditure to flow toward overseas suppliers, the government progressively increased the proportion reserved for domestic procurement.
For FY2025-26, approximately 75% of the modernisation budget—₹1,11,544 crore—was earmarked for procurement through domestic industries.
This creates a powerful cycle:
Indian military demand
→ Orders for Indian companies
→ Higher production volumes
→ Investment in manufacturing
→ Improved technology
→ Economies of scale
→ More competitive exports
→ Larger defence industrial base
That cycle is central to India’s long-term defence-industrial strategy.
6. Indigenous Platforms Are Becoming More Sophisticated
Perhaps the strongest evidence of India’s progress is not simply how much equipment it manufactures, but what it is capable of manufacturing.
India’s indigenous or increasingly indigenised portfolio includes systems such as:
- LCA Tejas fighter aircraft
- Akash surface-to-air missile system
- BrahMos cruise missile
- Pinaka multi-barrel rocket launcher
- Dhanush artillery gun
- Advanced Towed Artillery Gun System (ATAGS)
- Arjun main battle tank
- Advanced Light Helicopter
- Light Combat Helicopter
- radars and electronic-warfare systems
- software-defined radios
- naval destroyers, frigates and corvettes
- submarines constructed in India
- and the indigenous aircraft carrier INS Vikrant.
Government assessments cite many of these platforms as evidence of the growing sophistication of domestic defence manufacturing.
India has therefore progressed considerably beyond manufacturing small arms and ammunition.
It can now domestically build or integrate sophisticated aircraft, missile systems, artillery, armoured vehicles and large naval platforms.
7. Naval Shipbuilding Is One of India’s Strongest Success Stories
Among India’s defence sectors, naval shipbuilding represents one of the clearest examples of indigenisation.
Indian shipyards now construct sophisticated destroyers, frigates, corvettes, patrol vessels and other naval platforms.
The symbolic high point was the commissioning of INS Vikrant, India’s first domestically designed and constructed aircraft carrier.
An aircraft carrier is effectively a floating military airbase involving propulsion, power generation, aviation facilities, sensors, weapons, communications and thousands of integrated subsystems.
Building such a vessel demonstrated that India’s defence-industrial capability had moved into a significantly higher technological category.
8. Missile Technology Has Become a Major Indian Strength
India has also developed substantial capabilities in missile systems.
Programmes such as:
BrahMos, Akash, Astra and Pinaka, alongside multiple strategic missile programmes, have created expertise in propulsion, guidance, seekers, electronics, launch systems, command-and-control and advanced materials.
The BrahMos export contract with the Philippines was particularly significant because it demonstrated that India could export a sophisticated frontline weapon system rather than only components or basic military equipment.
Similarly, systems such as Akash and Pinaka have attracted international interest.
This is an important transition.
The real measure of a mature defence exporter is not simply selling protective equipment or spare parts—it is the ability to export complex, high-value weapon systems.
9. Defence Industrial Corridors Are Creating Manufacturing Clusters
India has established two major Defence Industrial Corridors:
Uttar Pradesh Defence Industrial Corridor
and
Tamil Nadu Defence Industrial Corridor.
As of February 2025, the two corridors had attracted more than ₹8,658 crore of investment, while 253 MoUs represented estimated investment potential exceeding ₹53,000 crore.
The concept is strategically important because defence manufacturing benefits from industrial clustering.
A large manufacturer can operate near suppliers producing electronics, precision components, ammunition, propulsion systems, composites, metallurgy and engineering services.
Over time, these clusters can reduce production costs and strengthen domestic supply chains.
10. Start-Ups Are Entering the Defence Sector
One of the quieter revolutions has occurred through Innovations for Defence Excellence (iDEX).
India has opened defence innovation to start-ups and MSMEs rather than relying exclusively on large established organisations.
The ecosystem increasingly covers technologies such as:
- artificial intelligence
- autonomous systems
- drones and counter-drone systems
- robotics
- cyber defence
- quantum technologies
- electronic warfare
- space technologies
- advanced sensors
- communications
- surveillance systems.
The government has also launched initiatives such as Mission DefSpace and opened portions of defence R&D funding to industry, start-ups and academia.
This could be crucial because the character of warfare is changing rapidly.
Future military advantage will increasingly depend on software, AI, autonomous platforms, sensors, space systems, cyber capabilities and electronic warfare—not merely traditional tanks, aircraft and ships.
11. Foreign Investment Rules Were Liberalised
India also changed the investment framework governing defence manufacturing.
Foreign direct investment in defence was liberalised to permit up to 74% through the automatic route, subject to applicable conditions, with higher investment possible through the government route in qualifying cases.
The objective is not simply to attract foreign capital.
India wants major international defence manufacturers to:
manufacture in India,
source components from India,
develop Indian suppliers,
and where commercially and legally feasible,
transfer technology and integrate Indian facilities into global supply chains.
That represents a significant shift from the traditional buyer-seller relationship.
12. India Wants to Become Part of the Global Defence Supply Chain
This may ultimately be more important than individual export contracts.
A country does not need to manufacture every complete platform to become a major defence-industrial power.
It can supply:
aircraft structures, electronics, software, engines and engine components, precision-machined parts, composites, radar components, ammunition, missile subsystems and engineering services to international manufacturers.
India is increasingly attempting to position itself in these global supply chains.
That allows Indian manufacturers to acquire manufacturing experience, improve quality standards and build export credibility.
13. The Transformation Has Strategic Consequences
Defence manufacturing cannot be evaluated purely as an industrial policy.
It is ultimately about strategic autonomy.
A country dependent on foreign suppliers for ammunition, missiles, spare parts and major platforms can become vulnerable during a prolonged conflict.
Supply chains can be disrupted.
Governments can impose sanctions.
Export licences can be withheld.
Foreign political priorities can change.
Domestic production does not eliminate these vulnerabilities—especially when locally manufactured systems still contain imported engines, sensors or other critical components—but it reduces them.
That distinction is important.
Atmanirbharta does not necessarily mean manufacturing every screw domestically.
A more realistic objective is ensuring that India controls enough critical technologies, manufacturing capacity, intellectual property and supply chains that its military effectiveness cannot easily be constrained by another country.
14. The Transformation Is Impressive—but Not Complete
Despite the progress, India should not declare the self-reliance mission accomplished.
Important technological dependencies remain.
India continues to rely on overseas suppliers in areas including certain aero-engines, advanced sensors and electronics, specialised materials and components, and some high-end aviation and underwater technologies.
Some indigenous programmes have also experienced lengthy development cycles and cost or schedule challenges.
Therefore, the next phase needs to move beyond “Made in India” toward:
“Designed, Developed and Made in India.”
There is an enormous difference.
Assembling a foreign-designed platform domestically builds manufacturing capability.
Designing the engine, radar, software, weapons, electronics and platform domestically creates technological sovereignty.
That is the harder challenge facing India over the next decade.
