Overview

India's defence sector has undergone a transformative journey over the past decade, shifting from a largely import-dependent system to an increasingly self-reliant defence manufacturing ecosystem under the vision of Atmanirbhar Bharat and Viksit Bharat 2047.

Rising Defence Budgets and Capital Expenditure

  • Defence spending increased from ₹2.53 lakh crore (FY 2013-14) to ₹7.85 lakh crore (FY 2026-27)
  • Capital expenditure for modernisation and military assets rose from ₹94,587.95 crore (2014-15) to ₹2.19 lakh crore (2026-27)
  • This reflects sustained focus on national security, modernisation, and self-reliance

Strengthening Defence R&D and Innovation

Defence R&D Allocation

  • Increased from ₹13,716.14 crore (2014-15) to ₹29,100.25 crore (2026-27) — a rise of over 112%
  • In 2022-23, 25% of defence R&D funding was opened to industry, startups, and academia
  • In 2024, ₹1,757 crore spent on industry-linked R&D initiatives
  • DRDO opened world-class R&D facilities in 24 labs to private industry through SOPs and the Defence Testing Portal

Innovations for Defence Excellence (iDEX)

  • Engages startups, MSMEs, individual innovators, research institutions, and academia
  • iDEX (approved outlay: ₹498.78 crore for 2021-22 to 2025-26) and ADITI (₹750 crore for 2023-24 to 2025-26)
  • By March 2026: 676 startups/MSMEs/innovators engaged
  • 551 design and development contracts signed

Development-cum-Production Partner (DcPP) Model

  • DRDO initiative for collaboration with Indian industry
  • Ecosystem includes 2,200+ industries capable of producing subsystems and systems
  • By March 2026: 134 companies engaged as DcPPs or Production Agencies
  • 2,180 technology transfer agreements signed
  • 2,780+ IPR opened for industry use

Technology Development Fund (TDF)

  • Ministry of Defence initiative executed by DRDO
  • Grants up to ₹50 crore for critical defence technologies
  • Additional corpus of ₹500 crore for deep-tech ecosystem
  • As of June 2026: 80 projects worth ₹334 crore under implementation
  • Two project systems flown in PSLV missions

DRDO Industry Academia – Centre of Excellence (DIA-CoE)

  • 15 Industry-Academia Centres of Excellence established
  • Focus on 82 identified research verticals
  • Industry Interaction Groups (IIGs) facilitate technology transfer

Defence Acquisition Reforms

DAP 2020 Reforms

  • Emphasis on domestic manufacturing and higher indigenous content
  • Acceptance of Necessity (AoN) granted for DRDO-designed and Indian industry-built systems worth over ₹6 lakh crore

Major Acquisitions

  • 97 Tejas Mk-1A fighter aircraft worth ₹62,000 crore
  • 156 Light Combat Helicopters (LCH) Prachand worth ₹62,700 crore
  • 26 Rafale Marine aircraft

Agnipath Scheme

  • Launched: 15th June 2022
  • Recruits young men and women as Agniveers for four-year service tenure
  • Aims to create a youthful, tech-savvy, and combat-ready force
  • Provides military training, skill development, educational support through IGNOU and NIOS
  • Nationally recognised skill certificates and post-service career pathways

Building Human Capability

  • Five Young Scientists Laboratories (DYSLs) established in 2020; sixth planned for 2026
  • DRDO maintains 36 focused laboratories for specialisation
  • Project-based manpower deployment for high-value projects
  • DRDO Skill Development Centre at Pilkhuwa (UP) for fire safety and firefighting training

Defence Procurement and Production Growth

Procurement Growth

  • 193 defence contracts worth ₹2,09,050 crore signed (FY 2024-25)
  • Contracts worth ₹1.82 lakh crore concluded (FY 2025-26)

Production Milestones

  • Defence production reached ₹1,78,000 crore (2025-26)
  • 15.6% annual growth and 110% increase since FY 2020-21
  • DPSUs contributed 76% while private sector share rose to 24%

Export Growth

  • Exports increased from ₹686 crore (2013-14) to ₹38,424 crore (2025-26) — over 5,500% growth
  • Exports to over 80 countries
  • Export base expanded to 145 firms
  • Government target: ₹50,000 crore exports by 2029

Defence Industrial Ecosystem Expansion

Industrial Base

  • 16 DPSUs, ~500 licensed firms, ~17,000 MSMEs
  • October 2021: Ordnance Factory Board (OFB) dissolved and reorganised into 7 DPSUs
  • Defence industrial licences increased from 258 (2015) to 834 (2026)

Defence Industrial Corridors

  • Uttar Pradesh corridor: Attracted investments of ₹42,057 crore
  • Tamil Nadu corridor: Attracted investments of ₹32,699 crore

Ease of Doing Business Reforms

  • Industrial licence validity increased from 7 years (extendable by 3) to 15 years (extendable to 18) in 2015
  • Under Arms Act: Licences now valid for lifetime of company
  • Defence Exim Portal: End-to-end digital processing, automated verification, real-time tracking
  • Srijan Defence Portal (2020): Promotes indigenisation with DPSUs listing items for domestic participation
  • Srijan DEEP Platform: Digital database with 41,000+ vendors and 2.7 lakh products registered

FDI in Defence

  • Sector opened to private participation in 2001
  • FDI limit increased to 74% (automatic route) and 100% (government route) in 2020
  • FDI inflow by March 2026: ₹6,670.59 crore
  • Promotes co-development and co-production with foreign OEMs

Key International Defence Partnerships

India–US

  • LEMOA (2016), COMCASA (2018), BECA (2020)
  • Designated Major Defence Partner with STA-1 status
  • iCET (2023), TRUST (2025), 10-year defence partnership (2025)
  • Cooperation in AI, semiconductors, space technology, Indo-Pacific security

India–Russia

  • IRIGC-M&MTC framework cooperation
  • S-400 and Su-30MKI upgrades, Exercise INDRA
  • MRO expansion in India, co-production under Aatmanirbhar Bharat

India–EU

  • Security and Defence Partnership (2026)
  • Covers maritime security, cyber defence, counterterrorism, space cooperation
  • Annual India–EU Defence Dialogue and Defence Industry Forum

India–France

  • Rafale deal (2016), Scorpene submarine programme
  • 26 Rafale-M aircraft approved (2023)
  • Dassault–TATA and Safran–HAL collaborations
  • Horizon 2047 defence industrial roadmap

Other Partnerships

  • India–Japan: ACSA (2020), JIMEX 2025, logistics support, maritime security
  • India–UAE: Strategic Defence Partnership (2026), Dubai Air Show (2025)
  • India–Australia: Comprehensive Strategic Partnership (2020)
  • SCO: Counterterrorism, counter-terror financing, WMD threat reduction
  • ASEAN/ADMM-Plus: Freedom of navigation, Indo-Pacific security, BrahMos cooperation
  • QUAD: Maritime security, Malabar exercises, critical minerals cooperation

Indo-Pacific Strategy

  • Anchored in SAGAR (2015) and MAHASAGAR (2025)
  • Positions India as net security provider in Indian Ocean Region
  • Strengthened through naval presence, multilateral exercises, capacity-building partnerships

Conclusion

India's defence transformation over the past decade reflects a fundamental shift from import dependence to strategic self-reliance. Through increased investment, technological innovation, industrial expansion, and global partnerships, India has built a strong and future-ready defence ecosystem supporting the vision of Viksit Bharat 2047.

Key Constitutional/Legal Provisions

  • Arms Act, 1959: Defence industrial licensing framework
  • DPP (Defence Procurement Procedure): Procurement regulations including DAP 2020
  • Strategic Partnerships Guidelines: FDI and joint venture frameworks