India's Ministry of Defence has announced a historic milestone: defence production reached a record ₹1.78 lakh crore in fiscal year 2025-26, marking a 15.6 percent increase from ₹1.54 lakh crore the previous year, more than double the ₹84,643 crore of fiscal year 2020-21, and nearly fourfold growth since fiscal year 2013-14 when the figure stood between ₹43,746 crore and ₹46,429 crore.
Exports surged 62.66 percent to ₹38,424 crore, representing over 5,500 percent growth since ₹686 crore in fiscal year 2013-14, reaching more than 80 countries. Contributions came from defence public sector undertakings at ₹21,071 crore with 151 percent growth and the private sector at ₹17,353 crore, accounting for 45.16 percent of exports. Overall private production hit approximately ₹42,000 crore, reflecting a 24 percent share of national output.
Fresh advancements include the initial successful trials of Project Kusha, the indigenous long-range air defence system aiming for S-400 class performance, continued hypersonic propulsion tests, and the commissioning of indigenous warships such as INS Dunagiri by Garden Reach Shipbuilders and Engineers.
This moment transcends impressive statistics. In an era defined by intensifying great-power rivalry, proliferating drone swarms, hypersonic weapons, cyber-electromagnetic contests, space denial operations, and sophisticated cognitive operations, India's Defence Industrial Base stands at a decisive inflection point.
The central question is whether India can evolve from a platform assembler achieving growing volumes into a visionary designer, seamless integrator, and influential exporter of intelligent, resilient, multi-domain systems that deliver credible strategic autonomy and powerful economic multipliers by 2047.
From Import Dependence to Production: Metrics of Profound Transformation
India's defence industrial base has undergone profound change under Atmanirbhar Bharat, Make in India, and related initiatives.
Production has scaled dramatically, with more than 65 percent of equipment now domestically sourced, a sharp departure from earlier heavy import reliance.
The fiscal year 2026-27 defence budget stands at ₹7.85 lakh crore, reflecting a 15.2 percent increase, approximately 2 percent of GDP, and 14.7 percent of central government expenditure. Capital outlay is approximately ₹2.19 lakh crore, with a strong focus on domestic procurement approaching 75 percent. Research and development allocations hover around ₹29,100 crore, although overall defence research and development remains modest at 3-4 percent of the total budget.
Public sector dominance persists with approximately 76 percent share through the Defence Research and Development Organisation and its network of around 50 laboratories, along with key defence public sector undertakings.
These include Hindustan Aeronautics Limited for aerospace platforms such as the LCA Tejas and LCH Prachand, Bharat Electronics Limited for radars and electronic warfare systems, Bharat Dynamics Limited for missiles, Mazagon Dock and Garden Reach Shipbuilders and Engineers for naval platforms, and corporatised ordnance entities that achieved production up to ₹26,282 crore.
Notable successes encompass the LCA Tejas Mk-1A entering series production, the LCH Prachand with 156 units ordered valued at ₹62,700 crore, Dhanush and ATAGS artillery systems, the BrahMos supersonic cruise missile with its 100th indigenous booster now in production, Akash surface-to-air missiles, Arjun tank variants, Arihant-class SSBNs, and indigenous carriers and corvettes featuring high micro, small and medium enterprise content.
"India's defence production has more than tripled in a decade through policy reforms, higher investments, and self-reliance. This is not just capacity building. It is credibility building," said Defence Minister Rajnath Singh.
Ecosystem Foundations: Policies, Incentives, and Enduring Structural Enablers
Five Positive Indigenisation Lists and the SRIJAN portal have listed more than 38,000 items and successfully indigenised over 14,000, with embargoes driving substitution, for instance, the fifth list covering 346 items and generating approximately ₹1,048 crore in savings.
The Defence Acquisition Procedure 2020, with potential updates in 2026, prioritises Buy (Indian-IDDM) categories and higher indigenous content.
Foreign direct investment is permitted up to 74 percent under the automatic route and 100 percent with approval in select cases.
Two Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu have attracted significant memoranda of understanding and investments.
Initiatives such as Innovations for Defence Excellence, with hundreds of challenges in artificial intelligence, drones, and quantum technologies, 676-plus startups engaged, and 551-plus contracts awarded, alongside ADITI for deep-tech, the Technology Development Fund supporting over 80 projects with a ₹500 crore corpus, production-linked incentives for drones, DcPP models that have facilitated 2,180-plus technology transfer agreements, and the Defence Testing Portal exemplify a whole-of-ecosystem push.
More than 430 licensed firms, 16,000-plus micro, small and medium enterprises, and 350-plus major manufacturers now form the expanded base.
These measures have shifted private sector contribution upward and fostered genuine dual-use innovation, although challenges in scaling post-prototype and achieving high-value system integration remain areas for focused improvement.
Comparative Landscape: Positioning India Among Global Peers
China's defence industrial base is vastly larger in scale, with budget estimates between US$277 billion and US$336 billion and actual spending likely higher, world-leading shipbuilding capacity, massive missile and drone production, and deep civil-military fusion.
The United States dominates in innovation depth, private primes such as Lockheed Martin and RTX, research and development intensity, and high-value exports, supported by a defence budget approaching US$900 billion.
Pakistan focuses on cost-effective assembly, notably the JF-17 fighter developed with China and various drone systems, while expanding low-cost exports.
Iran demonstrates resilient asymmetric production of drones and missiles under sanctions.
The United Arab Emirates builds agile high-tech niches through foreign direct investment and entities such as the EDGE Group.
Germany shows quality resurgence through Rheinmetall's expansion in ammunition and armoured vehicles.
India outperforms Pakistan and Iran in conventional breadth and long-term sustainability while advancing private sector diversification. It competes effectively with the United Arab Emirates and Germany on localisation ambition but at a significantly larger scale, and it selectively partners, for example with the United States on technology, to bridge critical gaps.
The remaining distance to global leaders lies primarily in absolute volume and subsystem maturity.
"The next phase needs a surge in research and development efficiency, deeper technology transfer, and closer integration among public sector undertakings, private industry, and academia to move beyond impressive volume to genuine cutting-edge leadership."
Critical Capabilities: Current State, Progress, Persistent Shortfalls, Imperatives
In armour and artillery, the Arjun Mk-1A with 118 units ordered and incorporating improvements in protection and fire control faces delays due to indigenous 1,500 horsepower engine development, with deliveries potentially slipping to 2030-31.
Future Main Battle Tank and high-altitude light tanks remain key priorities.
Artillery capabilities excel with near-full delivery of Dhanush systems, 307 ATAGS ordered with regiments expected by 2027, and the K9 Vajra, supported by advancing ammunition localisation.
Missile and hypersonic programmes represent operational strengths through BrahMos, Akash-NG, Pralay, Pinaka, and Agni series.
Hypersonic progress includes the Long Range Anti-Ship Missile boost-glide vehicle, Solid Fuel Ducted Ramjet, scramjet tests exceeding 1,200 seconds, and new wind tunnels, though propulsion and materials remain partially import-dependent.
Air defence is layered with multiple S-400 regiments, Akash, Barak-8, and QRSAM systems.
Project Kusha, an extended-range surface-to-air missile with up to 400 kilometre reach and three variants, achieved initial trial success in 2026 and targets induction around 2028-30 as a potential game-changer, complemented by directed energy weapons using lasers and microwaves.
Aero-engine development shows partial success with Kaveri, yet heavy reliance on imports such as the GE F404 for Tejas persists.
The Advanced Medium Combat Aircraft fifth-generation stealth fighter and associated 120 kilonewton engine, including collaboration with Safran, are under active development.
Light Combat Helicopter, unmanned aerial vehicles, swarms, and unmanned underwater vehicles advance through Innovations for Defence Excellence and production-linked incentives, with system integration improving although scaling lags.
Electronics, electronic warfare, command-and-control, and sonars benefit from Bharat Electronics Limited leadership, while terahertz, photonics, quantum technologies, and edge artificial intelligence progress through more than 15 Defence Innovation and Research Centres of Excellence.
Semiconductors, rare earths, and advanced composites constitute critical shortfalls, even as high-power microwave and laser directed energy weapons move through trials.
Naval and underwater programmes deliver indigenous warships and submarines, though Project-76 faces challenges in quiet propulsion.
Arihant-class SSBNs strengthen strategic deterrence.
The Defence Space Agency advances space situational awareness and responsive launches.
The Defence Cyber Agency operates with a Joint Cyberspace Doctrine, with potential elevation to full command status.
Special Forces including Para SF, MARCOS, and Garud upgrade with drones and secure communications, while a Defence Geospatial Agency is planned.
Shortfalls across domains encompass project delays, cost overruns, subsystem imports, modest research and development efficiency, testing infrastructure gaps, private sector scaling in complex systems, quality consistency, and supply chain resilience.
Defence Economics and the Shift Toward Integrated yet Distributed Force Structures
The fiscal year 2026-27 budget underscores fiscal commitment, yet pensions and revenue expenditure dominate around 70 percent of the total, constraining the pace of modernisation.
National targets aim for ₹3 lakh crore in production and ₹50,000 crore in exports by 2029.
Defence functions as a powerful economic multiplier through job creation, support for micro, small and medium enterprises, and advancement of manufacturing capabilities with broad civilian spill-overs.
Theatreisation encompassing Northern, Western, and Maritime commands, the Joint Multi-Domain Operations Doctrine, and proposed specialised commands for Space, Cyber, and potentially Drone, Data, and Cognitive domains seek to create integrated yet distributed force structures featuring centralised planning and decentralised execution for enhanced speed and resilience.
Smart Defence Industrial Strategy: Inescapable Pathways to Atulya Bharat
India's smart strategy, anchored in the Defence Forces Vision 2047 released in March 2026, envisions a phased transformation:
Era of Transition (To 2030)
Focused on restructuring, credible deterrence, and foundational indigenous technologies.
Consolidation Phase (2030-2040)
Emphasising cyber and space integration with layered defences.
Era of Excellence (2040-2047)
Delivering a fully integrated all-domain force.
The expanded pillars encompass full-spectrum autonomy and global competitiveness through 75-85 percent-plus subsystem indigenisation covering engines, semiconductors, materials, and rare earth processing by 2035 and near-complete levels by 2047.
This includes sovereign defence fabrication facilities and outsourced semiconductor assembly and test units, gallium nitride and silicon carbide technologies, and dual-use supply chains strengthened via corridors and new clusters.
The ambition includes top-five global exporter status supported by quality standards suitable for premium markets.
Multi-domain operations and force structures call for fully operational Theatre Commands alongside dedicated Space, Cyber, Drone, Data, and Cognitive commands, emphasising effects-based, software-defined systems with distributed lethality, resilient networks, and surge production capacity.
Technology leapfrogging prioritises widespread edge artificial intelligence and inference computing for autonomy, swarming, and predictive analytics; quantum-secure communications and sensors with progress beyond 1,000 kilometres; operational hypersonics and directed energy weapons scaling to 10-100-plus kilowatts; sovereign space constellations with robust situational awareness and counter-space capabilities; cyber offensive and defensive parity; and cognitive warfare tools.
Alignment of the national semiconductor mission with defence needs is essential.
Research and development must rise to 10-15 percent of the budget with increasing industry share, expanding Defence Innovation and Research Centres of Excellence, Technology Development Fund, Innovations for Defence Excellence, and ADITI initiatives into robust production pipelines.
Public sector undertaking-private-academia fusion, a private sector share of 40-50 percent-plus featuring champion companies, and massive skilling programmes in science, technology, engineering and mathematics, artificial intelligence, and quantum technologies will prove vital.
Economics and sustainability demand treating defence as a gross domestic product driver through jobs, exports, and dual-use applications, extending production-linked incentives, offering tax holidays, managing foreign direct investment with technology transfer safeguards, advancing green manufacturing, localising maintenance repair and overhaul, and adopting longer lifecycles.
Agile governance with annual reviews and rigorous metrics on indigenous content, deployment timelines, and export value will sustain momentum.
International partnerships will involve selective technology transfer from partners such as the United States and France for identified gaps while protecting core intellectual property and pursuing export-focused diplomacy toward the Global South.
This strategy is inescapable due to peer threats exemplified by China's scale and civil-military fusion, rapid technological disruption where artificial intelligence, space, and cyber dominance often decides outcomes, persistent supply chain vulnerabilities, and the imperative to harness India's demographic dividends in support of Viksit Bharat.
Risks of inaction include persistent capability gaps in high-intensity scenarios and substantial lost economic opportunities.
"For India's defence tech ecosystem to survive and thrive, sustained investment in original research and development coupled with genuine design authority is essential. Assembly alone will not deliver strategic autonomy," as per A.P.J. Abdul Kalam's Vision in Contemporary Context.
The Road to 2047: A Call to Collective Excellence and Enduring National Strength
India's defence industrial base renaissance reflects clear policy vision, geopolitical urgency, private sector dynamism, and the ingenuity of the Defence Research and Development Organisation.
Record metrics, platform successes across missiles, artillery, helicopters, and naval vessels, emerging technology trials in hypersonics, Project Kusha, and quantum domains, and the comprehensive Vision 2047 together provide a strong foundation.
Yet closing subsystem gaps, elevating research and development efficiency, accelerating integration, ensuring quality and scalability, and executing with unwavering accountability remain non-negotiable priorities.
Defence is no longer isolated security expenditure but a strategic economic and technological engine for national resurgence.
By relentlessly pursuing this smart, integrated, futuristic strategy, India can achieve Atulya Bharat 2047, a prosperous, secure, self-reliant global power that not only deters threats but actively shapes the future of multi-domain warfare and international defence norms.
The milestones of June 2026 are launchpads. Sustained political will and disciplined execution will determine whether India's defence industrial base becomes a timeless symbol of strength and excellence for generations to come.
[Major General Dr. Dilawar Singh, IAV, is a distinguished strategist having held senior positions in technology, defence, and corporate governance. He serves on global boards and advises on leadership, emerging technologies, and strategic affairs, with a focus on aligning India's interests in the evolving global technological order.]
