Rise of Private Sector Contribution in India's Defence Manufacturing

Defence Manufacturing in India

Sectoral Contribution: In FY 2024-25, defence public sector undertakings (DPSUs) represented 57.50% of the overall defence production, with Indian ordnance factories contributing 14.49% and non-defence PSUs supplying 5.4%.

Defence Budget Expansion: Rose from ₹2.53 lakh crore in 2013-14 to ₹6.81 lakh crore in 2025-26.

In 2024-25, India reached its record defence production of ₹1.50 lakh crore, over three times the ₹46,429 crore noted in 2014-15.

Increase in Indigenous Defence Manufacturing: 65% of defence equipment is now produced locally, marking a notable change from the previous reliance on 65-70% imports.

India aims for ₹3 lakh crore in defence production by 2029, strengthening its role as a global defence manufacturing center.

Increase in Military Exports

India's defense exports have skyrocketed, increasing from ₹686 crore in 2013-14 to ₹23,622 crore in 2024-25, marking a 34-fold rise.

India's varied export offerings comprise bulletproof vests, Chetak choppers, rapid interceptor vessels, and lightweight torpedoes.

India sells defense equipment to more than 100 nations, with the U.S., France, and Armenia being the leading destinations in 2023-24.

Government Involvement

Government initiatives like iDEX (Innovations for Defence Excellence) and DTIS (Defence Testing Infrastructure Scheme) foster innovation in the Defence & Aerospace sector.

The Acing Development of Innovative Technologies with iDEX (ADITI) Scheme is a component of iDEX, featuring a budget of Rs 750 crore for the duration of three years from 2023–2024 to 2025–2026.

It seeks to bolster essential and strategic technologies including satellite communication, sophisticated cyber technology, artificial intelligence, quantum technology, nuclear technologies, and underwater monitoring.

Two Defence Industrial Corridors (DICs) have been established in Uttar Pradesh and Tamil Nadu to enhance defence production. These pathways offer motivations for businesses investing in the industry.

Self-Reliant Initiatives through Joint Action (SRIJAN): Introduced by the Department of Defence Production (DDP) in 2020 to encourage indigenisation in the context of Atmanirbhar Bharat.

Acts as a shared platform for Defence Public Sector Undertakings (DPSUs) and the Armed Forces (SHQs) to catalog imported products for local production.

Ease of Business Operations (EoBO):

In 2019, the Defence Product List was optimized to decrease the quantity of items needing a manufacturing license.

The validity of defense licenses under the Industries (Development and Regulation) Act of 1951 has been increased from three years to 15 years, with an additional extension possibility of up to 18 years.

Path Forward

Establish Equal Competition: Guarantee clear procurement procedures to allow private companies to compete justly with DPSUs.

Enhance Export Network: Broaden export markets and encourage private firms to venture into emerging international markets.

Promote Start-ups: Enhance backing through iDEX and ADITI to cultivate defence start-ups in AI, quantum, space, and cyber fields.

Encourage Collaborative Ventures: Enable alliances with international defense leaders for shared development and technology exchange.

Talent Enhancement: Initiate targeted training initiatives to build a proficient workforce for new defence technologies.