India is slowly establishing itself as one of the top players in the global defence industry. The statistics suggest that the domestic defence industry had a turnover of ₹1.27 lakh crore in the fiscal year 2023-2024, and the exports had the highest ever value of ₹23,622 crore in 2024-2025. An incredible 65% of the country’s defence equipment is made in India now, while the imports constitute only about 30-35% of the total. The result of this strategy has been twofold: the country has not only managed to cut down its forex spending but also helped other sectors grow their industrial manufacturing capabilities.
The Key Drivers of Growth:
Government initiatives such as Atmanirbhar Bharat are fuelling market growth and innovation in the defence sector. Additionally, a gradual rise in the defence budget, coupled with threats from geopolitical instabilities, is supporting the need for modern equipment. Here’s a brief overview of these key drivers:
The New Era of Make in India
The Atmanirbhar Bharat as well as the Make in India campaigns are very important factors that have a great impact on India’s defence industry, as they encourage the local design, development and manufacturing, and thus the reliance on imports is reduced. These movements, along with the gradual increase in the defence budget, are monetarily the sources of new projects and the modernisation of the ones that are to be bought locally. The government has made life easier for the defence contractors by introducing new procedures that will not only facilitate the procurement but also carry out a revision of the defence acquisition guidelines. Besides, the local manufacturers and sellers are being provided with more assistance, which not only helps India to gain a foothold in the global defence market but also stimulates the creation of a strong and self-reliant defence manufacturing industry.
Market and innovation
At present, the public as well as the private sectors are getting a huge influx of orders due to the increased demand, resulting in higher profits and greater optimism about future growth. The private sector’s increasing participation is the source of new thoughts and innovations, which are making the industry more active and competitive. This transformation pushes companies to take different routes and look for new investment areas. A big part of the industry is concentrating on cutting-edge technologies like AI, cybersecurity, drones, and sensor systems, which are determined by their future in a number of sectors. Besides, programmes such as IDEX and Aditi are already making crucial contributions to startups and innovative projects by providing funding and being the growth and development drivers. These programmes not only expand the market by backing creative solutions and facilitating entrepreneurial ventures but also ensure that the industry remains adaptable and responsive to evolving demands. In conclusion, the partnership between the public and private sectors, combined with a focus on technological advancement, is paving the way for a promising future.
Economic and geopolitical factors
Turmoil around the world and lack of stability everywhere are the chief culprits of modern defence capabilities and equipment demand being drawn up to higher levels, thus causing the whole sector’s spending to increase. On top of that, a whopping rise in exports is happening, which is an indication of the world’s increasing demand for defence products. Besides, the government’s choice of raising the Foreign Direct Investment (FDI) ceiling in the defence sector has accelerated the inflow of foreign investment into the sector, which comes in the form of both capital and technology that will be employed to improve local production capacity.
The Impact of Homegrown Technology
The advantages of homegrown technology are already visible in the sophisticated military ships. India has revolutionised its military strength through the creation of the Dhanush Artillery Gun System, ATAGS, and the LCA Tejas fighter. The required skills are then transferred to the larger manufacturing base.
Several other industries, like tech and aviation, are also reaping the fruits of this progress, as discussed below:
Aerospace and Aviation
Defence projects are key to advancing aerospace technologies, requiring investments in design software, engineering, and assembly lines for indigenous platforms like the Light Combat Aircraft (LCA) Tejas and advanced helicopters. These benefits include the development of commercial aviation, such as military craft featuring high-efficiency jet engines and lightweight airframes made of composites, as well as complex flight control systems, enhancing the overall national aerospace ecosystem. Moreover, the military’s requirement for high-end drones and UAVs (Unmanned Aerial Vehicles) intended for surveillance, reconnaissance, and combat is the main factor behind the creation of a domestic drone industry. This technology can be applied to the commercial sector for agricultural, logistics, and mapping purposes.
Electronics and Software
It is impossible to imagine modern wars without the use of information technology; therefore, the defence sector has to rely on the most advanced digital systems. You can think of high-tech avionics and guidance systems, secure communications like software-defined radio, and the use of AI for autonomous decision-making. This is the main reason for the growth of India’s IT and electronics hardware sectors. Besides, artificial intelligence is having a revolutionary impact on the decision-making process with regard to the use of autonomous systems, thus speeding up and improving the accuracy of responses in combat situations.
Manufacturing and Shipbuilding
The defence procurement of India is making the manufacturing sector. The success of massive undertakings, such as the Main Battle Tank and indigenous naval vessels, not only brought about new employment opportunities but also improved manufacturing processes, elevating the levels of the automotive, shipbuilding, and heavy engineering industries.
Technology Transfer and Economic Gains
One of the most captivating long-term advantages could be the transfer of technology from the military to the civilian sector, which is usually seen as one of the most exciting. Innovations initially developed for military use, such as radar, advanced materials, and precise manufacturing, are very often adapted to consumer goods and commercial applications, thus making a significant contribution to the growth of the economy.
Bottom Line
India is not only producing tanks and fighter jets but also focusing on creating jobs and industrialising. With rapid technological development and improvements in quality, it is set to become a world leader while reducing dependence on imports.