Indian Defence Manufacturing Industry

The Indian Defence ecosystem is a confluence between the Government and the defence manufacturing industry.

Ministry of Defence has set a target of achieving a turnover of US$ 25 million in aerospace and defence manufacturing by 2025, which includes US$ 5 billion exports.

Of the Union Budget for Financial Year 2023-24, Ministry of Defence has been allocated a total Budget of US$ 72.2 billion (Rs. 5,93,537.64 crore), which is 13.18 % of the total budget. This includes an amount of US$ 16.8 billion (Rs. 1,38,205 crore) for Defence Pensions. The total Defence Budget represents an enhancement of US$ 8.3 billion (Rs. 68,371.49 crore) (13%) over the Budget of 2022-23.
India has the world’s third-largest defence expenditure, as of 2021, and expects to export equipment worth US$ 15 billion by 2026.
The value of defence production in the country crossed Rs. 1 lakh crore (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 Rs. 1,08,330 crore (US$ 13.07 billion) in FY23 compared to Rs. 95,000 crore (US$ 11.47 billion) in FY22 and Rs. 54,951 crore (US$ 6.63 billion) five years ago.
Thrust on Modernisation & Infrastructure Development Sustained in Union Budget 2023: In the Union Budget 2023-24, the Capital Investment Outlay has been increased steeply for the third year in a row by 33% to US$ 121 billion (Rs. 10 lakh crore), which would be 3.3% of GDP. This will be almost three times the outlay in 2019-20.

As per the Union Budget 2023-24, the Capital Allocations pertaining to modernization and infrastructure development of the Defence Services have been increased to US$ 19.7 billion (Rs. 1,62,600 crore) representing a rise of US$ 1.2 billion (Rs. 10,230 crore) (6.7%) over FY23. Also, the increase in the Capital Budget since 2019-20 has been US$ 7.2 billion (Rs. 59,200 crore) (57%). This increase is a reflection of the Government’s commitment towards sustainable augmentation in the area of modernization & infrastructure development of the Defence Services.

Recognising the crucial role of Research, Innovation and Technological development towards capacity building of the Armed Forces as well as fueling India’s Mission of Aatmanirbharta.

The Indian government is focussing on innovative solutions to empower the country’s defence and security via ‘Innovations for Defence Excellence (iDEX)’, which has provided a platform for start-ups to connect to the defence establishments and develop new technologies/products in the next five years (2021-2026). The Defence Ministry has set a target of 70% self-reliance in weaponry by 2027, creating huge prospects for industry players. The defence ministry estimates a potential contract worth Rs. 4 lakh crore (US$ 57.2 billion) for the domestic industry in the next 5-7 years (2025-2027).