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Defense Manufacturing

The Indian Defence sector, the second largest armed force is at the cusp of revolution. The Government has identified the Defence and Aerospace sector as a focus area for the ‘Aatmanirbhar Bharat’ or Self-Reliant India initiative, with a formidable push on the establishment of indigenous manufacturing infrastructure supported by a requisite research and development ecosystem. 

The top three largest market segments of the Indian defense sector are military fixed wing, naval vessels and surface combatants, and missiles and missile defense systems. Military rotorcraft, submarines, artillery, tactical communications, electronic warfare, and military land vehicles are some of the other well-known segments. 

Some of the major defense manufacturing companies in India are Bharat Earth Movers Ltd. (BEML), Bharat Electronics Ltd. (BEL), and Hindustan Aeronautics Ltd. (HAL). The Indian defence manufacturing industry is a significant sector of the economy. The industry is likely to accelerate with rising concerns about national security.

  • The Indian government has set the defense production target at US$ 25 billion by 2025 (including US$ 5 billion from exports by 2025). India is one of the world’s biggest defence spenders with a total outlay of US$ 74.8 billion (Rs. 6.21 lakh crore), accounting for 13.04% of the total budget and indicating an increase of 4.72% over the Budget of 2023-24 and 18.35% over the allocation for 2022-23.

  • India’s military spending of US$ 81.4 billion ranked fourth highest in the world in 2022. This was up by 6% from 2021.

  • The value of defence production in the country crossed US$ 12 billion for the first time on the back of key reforms to spur growth in the sector that holds vast potential. The figure stood at US$ 13.1 billion in FY23 compared to US$ 11.4 billion in FY22. The value of defense production in FY24 stood at US$ 5.6 billion while the defense production by PSU’s stood at US$ 3.04 billion.

  • India’s defence import value stood at US$ 463 million for FY20 and US$ 469.5 million in FY21. India targets to export military hardware worth US$ 5 billion in the next five years. As of 2019, India ranked 19th in the list of top defence exporters in the world by exporting defence products to 42 countries. Defence exports in the country stood at US$ 1.9 billion in FY23. Defence exports rose 240% over five years in FY23 and India now exports to over 85 countries due to collaborative efforts.

  • Government has established two Defense Industrial Corridors in Uttar Pradesh and Tamil Nadu.

  • India has around 194 defense tech startups building innovative tech solutions to empower and support the country’s defense efforts.