A new era of self-reliance and strategic assertiveness.
“Atmanirbhar Bharat”: The Vision Fueling India’s Defense Transformation
The ‘Atmanirbhar Bharat’ (Self-Reliant India) vision aims to cultivate indigenous capabilities, reduce import reliance, invigorate domestic manufacturing, and champion innovation. This vision strengthens national security by securing critical defense technology supply chains, generates high-tech employment, catalyzes economic growth, and positions India as a net exporter of advanced defense equipment.
Key policy reforms include:
- Positive Indigenisation Lists: These lists identify defense items for indigenous manufacturing, fostering a robust local supply chain. In FY 2024-25, 75% of the modernization outlay, amounting to ₹1,05,518.43 crore, was reserved for domestic procurement.
- Simplified Procurement Procedures: The Defence Acquisition Procedure (DAP) 2020 prioritizes “Buy Indian (IDDM)”. In FY 2024-25, the Ministry of Defence signed 193 contracts worth ₹2,09,050 crore ($24.59 billion), with 177 contracts (₹1,68,922 crore) awarded to domestic industry.
- Increased Budgetary Allocations:
- FY 2024-25 total defense budget (including pensions): ₹6,21,940.85 crore (approx. $75 billion), the highest allocation among government ministries.
- FY 2025-26 defense budget: ₹6,81,210 crore (approx. US$77.4 billion to US$81 billion), a 9.53% increase.
- Projected defense spending: 8% CAGR, reaching $130 billion over five years.
- Total defense spending (including pensions) forecast: $415.9 billion from 2025-2029 (3.7% CAGR).
- Calendar year FY 2025 defense budget: ₹7.86 lakh crore (US$93 billion), positioning India as the world’s third-largest military power.
India Defense Sector Growth FY 2024-25: A Deep Dive into Record Achievements
FY 2024-25 has been a landmark period for India’s defense sector, with unprecedented achievements in domestic production and exports.
Record-Breaking Domestic Defense Production: A New High
- FY 2024-25 Domestic Production: ₹1,50,590 crore (approx. $16.56 billion), with some reports indicating ₹1.54 lakh crore (US$ 17.57 billion).
- 18% growth over FY 2023-24’s ₹1.27 lakh crore (US$ 14.28 billion).
- 90% increase since FY 2019-20 (₹79,071 crore).
- 174% growth in indigenous defense production over the past decade (from ₹46,429 crore in 2014-15 to ₹1,27,434 crore).
- Market Projections: Indian defense market projected to grow from USD 18.41 billion in 2025 to USD 24.39 billion by 2030, at a 5.79% CAGR.
- Government Targets:
- ₹3,00,000 crore (US$ 34.7 billion) in annual defense manufacturing by FY 2029.
- Interim goal of ₹1.75 lakh crore in FY 2025-26.
- Production projected to exceed ₹1.60 lakh crore (US$19 billion) between 2025 and 2026.
- Public vs. Private Sector:
- Defence Public Sector Undertakings (DPSUs) and other PSUs accounted for 77% of total production in FY 2024-25.
- Private sector contribution increased from 21% in FY 2023-24 to 23% in FY 2024-25.
- Year-on-year growth: 16% for public sector, 28% for private sector in FY 2024-25.
- Future Projections: Targets supported by investments in R&D, infrastructure, skill enhancement, and advanced technologies like AI.
India’s Soaring Defense Exports: Global Impact
- FY 2024-25 Defense Exports: ₹23,622 crore (US$ 2.76 billion).
- 12.04% increase over FY 2023-24’s ₹21,083 crore (US$ 2.63 billion).
- 34-fold increase since FY 2013-14’s ₹686 crore (US$ 81.1 million).
- Export Range: Ammunition, arms, sub-systems, and complete systems to approximately 100 countries.
- Key Export Platforms & Destinations: Pinaka multi-barrel rocket launchers, advanced radars, simulators, mine-protected vehicles, armored vehicles, and components.
- BrahMos missiles exported to Indonesia in February 2025.
- Export authorizations surged by 16.92% to 1,762 in FY 2024-25.
- Number of defense exporters increased by 17.4%.
- Private Sector Role in Exports: Contributed 64.5% (₹15,233 crore) in FY 2024-25, compared to ₹8,389 crore from DPSUs.
- DPSU exports saw a 42.85% increase.
- Future Export Targets:
- ₹30,000 crore by March 2026.
- ₹50,000 crore (US$5.9 billion) by 2029.
- Some sources suggest ₹3 lakh crore (US$35 billion) by 2029.
Key Drivers: Policy Reforms & Strategic Initiatives Powering Growth
Indigenization & Innovation: Building Self-Reliance
- “Positive Indigenisation Lists” (PILS): Cover over 600 defense items, reducing import dependency.
- “Make in India defense” initiative: Provides a roadmap for domestic industry R&D and manufacturing.
- iDEX (Innovations for Defence Excellence) and ADITI scheme: Engage startups, MSMEs, and innovators.
- iDEX offers grants up to 50% of product development budget, maximum ₹25 crore.
This ecosystem promotes research, development, and production of state-of-the-art defense equipment.
Enhancing “Ease of Doing Business” for Defense Manufacturers
Streamlined regulations, simplified industrial licensing, de-licensing of parts/components, and easier export authorization SOPs.
- Liberalized Foreign Direct Investment (FDI) norms: up to 74% via automatic route, 100% with government approval.
- Defense Industrial Corridors:
- Uttar Pradesh Defence Industrial Corridor (UPDIC):
- Nodes: Aligarh, Agra, Chitrakoot, Jhansi, Kanpur, Lucknow.
- As of September 2025: Investment proposals ₹33,896.16 crore, projected total ₹35,000 crore, expected to generate over 52,000 jobs.
- 62 companies allotted land, 9 units operational.
- “UP Aerospace and Defence Unit and Employment Promotion Policy 2024” offers incentives.
- Major manufacturers: Adani Defence, BrahMos Aerospace.
- Tamil Nadu Defence Industrial Corridor (TNDIC):
- Nodes: Chennai, Coimbatore, Hosur, Salem, Tiruchirappalli.
- As of February 2023: Potential investments ₹11,794 crore by 53 industries, ₹3,861 crore already invested.
- Strategic advantages: large coastline, robust industrial ecosystem, investor-friendly Aerospace & Defence policy.
- Uttar Pradesh Defence Industrial Corridor (UPDIC):
These corridors integrate MSMEs and startups into the defense supply chain.
Synergy Between DPSUs & Private Players: A Collaborative Future
Growth characterized by strong synergy, leveraging unique strengths through joint ventures, technology transfers, and co-development.
- DPSUs account for 77% of production, while the private sector’s contribution is growing (23% in FY 2024-25).
This collaboration fosters a dynamic defense industrial base, accelerates innovation, and ensures a resilient supply chain.
Technological Advancements & Future Outlook: Paving the Way Ahead
Continuous technological advancement is crucial for India’s defense sector. India is integrating global trends like advanced AI and investing in next-generation capabilities.
Driving Future Capabilities: India Defense Sector Growth FY 2024-25 Through R&D and AI
- AI Integration and Application: Enhancing national security, modernizing armed forces, and achieving self-reliance.
- Intelligence, Surveillance, and Reconnaissance (ISR): AI-driven systems for real-time threat detection. Approximately 140 smart surveillance systems deployed at borders. Indian Navy uses drones for ISR since 2020.
- Autonomous Systems and Robotics: Development of UAVs for reconnaissance, combat, and logistics (e.g., DRDO’s Rustom, Tapas BH-201). AI enables UAV wingmen in HAL’s Combat Air Teaming System (CATS). Research into humanoid robot soldiers and AI-powered autonomous underwater vehicles (AUVs).
- Logistics and Predictive Maintenance: AI reduces downtime for platforms like fire control systems and aircraft. HAL uses an AI-based Snag Disposition System.
- Cybersecurity and Electronic Warfare: Enhanced cyber warfare capabilities through AI, quantum, and cyber technologies. AI used in electronic warfare by companies like DCX Systems.
- Decision-Making and Battlefield Awareness: Data-driven decision-making. Operation Sindoor (May 2025) demonstrated 23 AI-driven applications for intelligence analysis, predictive modeling, and weather forecasting.
- Training and Simulation: Zen Technologies embeds AI into battlefield simulation platforms. Wargame Research and Development Centre (WARDEC) in New Delhi will be India’s first AI-driven simulation training hub.
- Key Players and Collaborations in “Defense R&D India”:
- DRDO: Centre for Artificial Intelligence and Robotics (CAIR) has developed over 75 AI products. Focus shifting to AI, quantum tech, and cyber defense.
- PSUs: Bharat Electronics Limited (BEL) leads state-run AI innovation with its AI Incubation Centre. Hindustan Aeronautics Limited (HAL) embeds AI into aerospace platforms.
- Private Sector and Startups: Over 1,000 defense-tech startups contribute to India’s AI defense ecosystem. Companies like Data Patterns, Zen Technologies, Paras Defence (PARAS.AI), Solar Industries, and MTAR Technologies are at the forefront.
- AI Defense Sector Value: Projected to grow from $0.7 billion in 2025 to $2.5 billion by 2030, with a 28% CAGR.
- Emerging Technologies Beyond AI:
- Unmanned Systems: UAVs, Unmanned Underwater Vehicles (UUVs), Autonomous Surface Vessels (ASVs).
- Cyber Warfare: Offensive and defensive cyber operations.
- Quantum Technology: Quantum communication systems, quantum-based sensors.
- Directed Energy Weapons (DEWs): High-energy lasers and microwave weapons (e.g., DURGA II).
- Hypersonic Missiles: Ultra-fast and highly maneuverable weapon systems.
- Advanced Manufacturing: Additive manufacturing (3D printing).
- Space-Based Technologies: Plans to launch 52 dedicated defense satellites by April 2026.
Strategic Partnerships & Bolstering Global Positioning
Collaborative ventures with friendly nations for co-development and co-production facilitate technology transfer and market access.
- India-US Defense Partnership:
- 10-year framework.
- Recent/planned deals (2024-25): Procurement of 31 MQ-9B Predator drones from the USA.
- Collaboration on GE F414 turbofan jet engines for indigenous aircraft.
- Discussions on “Reciprocal Defence Procurement Agreement” and “Security of Supplies Arrangement (SOSA)”.
- US-India Defense Acceleration Ecosystem Summit emphasizes defense industrial cooperation.
This partnership is vital for strategic stability, technological advancement, and potentially bolstering QUAD nations’ security.
Addressing Challenges & Sustaining India’s Defense Momentum
- Budget Allocation: 51% of estimated spending for FY 2024-25 allocated to salaries and pensions, impacting modernization and R&D funds.
- DRDO Funding: DRDO received only 3.84% of the total defense budget, considered insufficient for high-tech advancements compared to global leaders.
- Other challenges: Attracting and retaining specialized talent, ensuring quality control, and streamlining bureaucratic processes.
Sustaining momentum requires continuous policy innovation, robust financial backing, and a focus on operational efficiency and technological superiority.
Conclusion
FY 2024-25 is a watershed moment for India’s defense sector, demonstrating significant progress towards self-reliance and global leadership. Record domestic production (over ₹1.54 lakh crore) and surging exports (₹23,622 crore) are results of a clear strategic vision, effective policy implementation, and the ‘Atmanirbhar Bharat’ initiative. The integration of advanced technologies like AI, coupled with the synergy between DPSUs and private players, drives innovation and enhances capabilities. India is rapidly transforming into a high-tech defense exporter through investments in R&D, nurturing defense industrial corridors, and forging international partnerships. The remarkable India defense sector growth FY 2024-25 signifies a thriving defense industrial base reshaping India’s geopolitical standing and securing its future.
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