India is undergoing a significant transformation in defense technology, extending beyond military modernisation. The country is entirely redefining its strategic stance for the coming century. A vision of self-reliance, economic nationalism, and global ambition drives this evolution.
Public sector undertakings have led the growth of the Indian defense sector for decades. However, that model is now changing quickly. Indigenous systems are now fully operational, including the Tejas fighter jet, BrahMos missile, Akash air defense system, and advanced UAVs. They have transitioned from mere ideas to products ready for export.
This evolution isn't just about strengthening the military; it's also about enhancing its capabilities. It's also about restructuring India's industrial economy. The government has set a notably ambitious target: reaching ₹50,000 crores (approximately $6 billion) in defense exports by 2029.1 What is propelling this momentum?
A strategically coordinated combination of Atmanirbhar Bharat, production-linked incentive (PLI) schemes, and public-private partnerships. The nation's defense budget has seen a steady rise during the last decade, from ₹2.53 trillion in FY 2014 to ₹6.81 trillion in FY26.2 The defense industry in India now plays a central role in a wider national policy shift that also includes semiconductor manufacturing, electronics exports, and increased engagement in the global value chain. The convergence of defense innovation and economic nationalism is transforming how India interacts with the global order, not merely as a buyer of the latest goods, but as a manufacturer and exporter of next-generation technologies.
This transformation is unfolding amid a surge in both domestic and global demand for defense products. India recorded its highest-ever defense production in FY2024 at ₹1.27 trillion, a 174% increase from ₹46,429 crore in FY2015.3 The country is experiencing a surge in global interest and demand for its homegrown systems following Operation Sindoor in May. This momentum also comes at a time when military expenditure worldwide increased to over $2.7 trillion in FY 2024.4
It reinforces India’s growing strengths as a manufacturing hub for defense products. The country’s large and capable supplier base, supported by a skilled workforce, is enabling the development of local supply chains while boosting joint ventures (JVs) and facilitating smooth transfer-of-technology (ToT) arrangements.
One of the most prominent examples is the JV between the Defense Research and Development Organisation (DRDO) and Russia’s NPO Mashinostroyeniya (NPOM) for the development, production, and marketing of the BrahMos supersonic cruise missile.5 Hindustan Aeronautics Limited (HAL) has also partnered with global players such as Boeing, Dassault Aviation, and Sukhoi to manufacture advanced military equipment in India.6 Additionally, several major foreign defense companies, including Airbus, Lockheed Martin, and Rafael Advanced Defense Systems, have established operations in the country through direct investments, JVs, and strategic partnerships.7
Furthermore, producing homegrown defense products provides India with a considerable cost benefit, as competitive labour and manufacturing costs make it more affordable than other major production centres.
India’s expanding trade network further solidifies this position. For example, its free trade agreement with Australia enhances defense and maritime cooperation, reinforcing shared objectives to develop resilient, future-ready economies and strategic interdependence.8
The government is also investing in dedicated infrastructure, notably by establishing two Defense Industrial Corridors, one in Uttar Pradesh and another in Tamil Nadu. These corridors aim to develop a robust ecosystem for defense manufacturing, attract both domestic and foreign investment, encourage collaboration, and enhance self-reliance in the sector.9
This growth has drawn in local financiers, international venture capitalists, and global industry veterans, all of whom view the sector as a high-growth opportunity. What was once a domain dominated by public sector monopolies has transformed into a new private space for Indian defense companies, dynamic startups, and the thousands of MSMEs that now form the backbone of a new industrial ecosystem.
Exports of indigenous defense products have also risen sharply, from ₹686 crore in FY2014 to ₹23,622 crore in FY2025, up 34-fold in just 11 years.10
Some of the key JVs in India’s defense sector include the Tata-Boeing JV in aerospace manufacturing, GE Aerospace, and Hindustan Aeronautics Limited (HAL) JV, which was expanded in 2023 for producing fighter jet engines. Bharat Electronics Limited (BEL) and Israel Aerospace Industries (IAI) are partnering to extend long-term support to India’s Medium Range Surface-to-Air Missile (MRSAM) systems.11
To maintain this trajectory, the government has also introduced a series of policies to boost defense production and ensure that demand is met domestically. A flagship reform under the Atmanirbhar Bharat initiative, the Defense Acquisition Procedure (DAP) 2020 streamlines procurement of advanced systems for the armed forces while raising indigenous content requirements.12 A key component of DAP 2020 is the Positive Indigenisation List (PIL), which mandates that certain defense items be sourced only from Indian manufacturers, including both private firms and Defense Public Sector Undertakings (DPSUs).
Furthermore, the Innovations for Defense Excellence (iDEX) initiative, launched in 2018, is boosting defense and aerospace innovation by engaging MSMEs, startups, individual innovators, R&D institutes, and academia. The government initiative is offering grants of up to ₹1.5 crore to develop cutting-edge technologies.13
Fundamentally, this revolution is about national pride, driven by the belief that India can now not only defend itself but also equip others and lead globally with technology. And why shouldn't it? After all, it is the world's largest democracy and should be prepared to face strategic, technological, and economic challenges head-on.
These six sectors present real and increasingly significant opportunities in the defense industry.
1. Private manufacturing
The industrial engine behind India's defense manufacturing sector has been opened to private enterprise with a fervour unprecedented in the nation's post-independence history. This momentum has been fuelled by strategic policies that promote technological innovation, private participation, and the creation of cutting-edge military platforms. The country's resolve to fortify its military infrastructure is demonstrated by the increase in the defense budget, which went from ₹2.53 lakh crore in 2013–14 to ₹6.81 lakh crore in 2025–26.14 The government’s continuous support and a vision of a self-reliant defense sector seems to have paid off, with 23% of the total defense production being attributed to India’s private sector.15 Companies such as Larsen & Toubro, Tata Advanced Systems, and Bharat Forge are developing components for fighter aircraft, artillery systems, submarines, and electronic warfare platforms. What was once a closely guarded area of the public sector has now become a competitive space for innovation and execution. The government’s policy reforms, such as raising FDI in defense to 74% through the automatic route16 and streamlining the procurement process, have fostered an environment conducive to collaboration between domestic and international partners in the Indian defense industry.
2. Indian defense drones: The launch of aerial autonomy
India is now a major player in drone warfare technology. India’s military plans to invest over ₹3,000 crore in purchasing nearly 2,500 military drones, with the Chief of Army Staff Gen. Upendra Dwivedi recently describing plans to introduce indigenous drones as part of developing "smart soldiers," with each soldier equipped with a "drone to himself, an eagle on the arm of every soldier." India’s drone market is expected to surpass $40 billion (₹3.36 lakh crore) over the next ten years, so the government is encouraging local drone manufacturing through programs like the Production-Linked Incentive (PLI) scheme and changing regulations like the Drone Rules, 2021.17
This sector benefits from a convergence of innovation and necessity. Drone systems are now vital for modern warfare, particularly in border security, asymmetric warfare, and real-time reconnaissance. Moreover, India is developing this technology domestically, creating drones equipped with anti-drone systems, edge AI, and autonomous navigation capabilities. India is currently one of the leading emerging exporters of battlefield UAVs, so it is not solely producing for its own use.
3. Space defense: Protecting the last frontier
India now aims to utilise space for both national defense and scientific research. Following Operation Sindoor, which highlighted the importance of "deep" and "persistent" surveillance over enemy territory, India is set to accelerate the launch of 52 dedicated defense satellites for surveillance of coastline and land borders.18 Budgets for military communication, surveillance, and navigation satellites are also increasing. In October 2024, the Cabinet Committee on Security approved the ₹26,968-crore Phase 3 of the Space-Based Surveillance (SBS) programme, which includes the launch of 52 satellites: 31 will be launched by three private Indian companies, and 21 will be built and launched by the Indian Space Research Organisation (ISRO). The project is led by the Defense Space Agency (DSA), which is part of the Ministry of Defense's Integrated Defense Staff (IDS). Early-warning systems, jamming-resistant communication, and space-based situational awareness are now crucial for missions, not just concepts.19 Private defense companies in India can collaborate to develop sensor technology. They can also deploy services or secure satellite payloads for military platforms in space. This industry offers unmatched strategic value and long-term contracts.
4. Cybersecurity: The most recent and silent
Cybersecurity has become a crucial component of national security as battlefield operations increasingly become digital. Groups such as CERT-IN and the Defense Cyber Agency are investing in advanced encryption algorithms, secure command-and-control infrastructure, and proactive cyber threat intelligence. Cyber resilience is central to India's Digital Armed Forces vision. This sector offers a unique blend of ongoing development and technological complexity. Software forms the backbone of all new defense platforms, including satellites, drones, and aircraft. However, the software also needs protection. Spending on defense cybersecurity is steadily rising, and Indian companies are well-placed to benefit from this growth lead.
5. AI in Defense: More rapid intelligence than bullets
The Indian battlefield is undergoing subtle evolution due to the application of artificial intelligence. The Government of India’s has allocated ₹100 crore annually for military AI projects.20 For real-time situational awareness, the Indian Army has already adopted AI-based speech recognition and image analysis tools. The Air Force and Navy are implementing AI-driven predictive maintenance and logistics tools. Meanwhile, public-private laboratories are exploring machine learning for threat detection and force deployment optimisation, and programmes like iDEX (Innovations for Defense Excellence) are providing funding to startups developing AI in defense. There is potential to integrate AI into battlefield systems such as surveillance, command centres, logistics, or navigation. In terms of military intelligence, this marks India's breakthrough moment.
6. MSMEs in defense supply chains: Small units, strategic value
The role of domestic industries, particularly MSMEs, has become more crucial than ever as India advances towards its aim of achieving self-sufficiency in defense manufacturing. India's defense budget, which emphasises modernisation and indigenisation, exceeded ₹6.8 lakh crore in FY2025-26.21 Private sector companies accounted for a larger share of defense production in 2023-24 than has been seen in at least eight years. The SRIJAN portal, defense offsets, and the Make-II procurement process are all examples of changes that have made it easier for small manufacturers to enter the defense ecosystem. This isn't just for show; many MSMEs are now Tier 1 or Tier 2 suppliers to major defense platforms. These companies are no longer hidden players; they contribute innovative ideas in materials, electronics, and precision machining. One can become a specialised supplier, R&D partner, or technology co-developer within India's expanding defense manufacturing network. It is fair to say that in India's defense industrial base, MSMEs are the unsung heroes and the primary drivers of growth.
Conclusion
The boom in Indian defense technology is not just a short-term policy push but a long-term national mission. With each missile system it tests, every drone it deploys, and each AI tool it employs, India advances towards reshaping its global role. This reflects, on one hand, industrial expansion, and on the other, national dignity. It shows that India is ready to set its own rules for its strategic and technological future. If you are building, investing, and creating new ideas, now is the best time to join the Indian defense technology revolution. To learn more about India’s defense tech boom, visit https://www.investindia.gov.in/.
