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.
- India’s defense relations in 2024-2025 have become increasingly diverse and strategically significant across different regions of the world. In the Asia-Pacific region, India has focused heavily on its engagements in the Indo-Pacific, with strong partnerships through the Quad, comprising the United States, Japan, Australia, and India. Joint defense exercises, like the Malabar Naval Exercises, are central to enhancing regional security, promoting interoperability, and strengthening India’s defense presence in the region. India continues to play a key role in ensuring stability in the South China Sea, with growing defense exports and military cooperation in the region.
- In the Gulf Region, India has built closer defense ties with countries such as Saudi Arabia, the UAE, and Qatar. These partnerships have expanded with increased military cooperation, defense exports, and counter-terrorism collaborations. India has been offering training programs and technological support to strengthen defense capabilities in the Gulf. The economic and security relationships between these countries and India have flourished, driven by shared interests in regional stability and mutual defense needs.
- India’s defense connections with Europe have deepened, particularly with France and Germany. France has been a critical partner, providing advanced military technology, such as naval equipment and fighter jets. The growing defense relationship is also marked by joint military exercises, cooperation in counter-terrorism initiatives, and research in defense technology. These efforts have helped India secure a stronger defense footing in the European market and enhanced its security collaborations within the region.
- Relations with America have been among the most significant in recent years. The signing of foundational agreements, including the BECA, COMCASA, and LEMOA, has greatly facilitated military cooperation and defense technology exchanges. India and the U.S. have engaged in numerous defense exercises and jointly developed technologies to address shared security concerns in the Indo-Pacific. With this evolving defense partnership, India has solidified its role as a key security partner in the region, while also increasing its defense exports to the U.S.
- In Africa, India has focused on expanding defense ties with nations like Ethiopia, Kenya, and South Sudan. India has been providing defense equipment, including small arms, armored vehicles, and ammunition, while also offering training and strategic support. This growing defense engagement in Africa is integral to India’s efforts in promoting regional security, particularly in combating terrorism and ensuring maritime stability in the Indian Ocean.
- India’s defense relationships in the CIS region have centered on countries like Russia, Kazakhstan, and Uzbekistan. These partnerships are marked by joint military exercises, defense exports, and cooperation in counter-terrorism and regional security issues. Russia continues to be a long-standing defense partner, while India’s growing ties with Central Asia focus on mutual defense interests, including addressing security concerns along the Afghan border.
