The defence industrial sector of India is strategically important in India. India has one of the world's largest military forces with a strength of over 1.55 million active personnel. The country has the world's largest volunteer military of over 5.1 million personnel. The total defence budget sanctioned for the financial year 2026 is . India's defence spending is between 1.9% to 2.2% of the country's gross domestic product. The country has the largest annual defence budget behind USA (US$732 billion) and China (US$261 billion). India's defence budget is projected to increase to US$415.9 billion between 2025 and 2029.
India is the world's 2nd largest defence importer, as of 2023, making up 9.8% of global arms imports. India has a domestic defence industry of which 60% is government owned. The public sector includes NTRO, CSIR, PRL, DRDO and its 50 labs, 4 defence shipyards, 12 defence public sector undertakings (PSUs). India has a new defence procurement, acquisition and manufacturing policy to reduce imports and enhance domestic manufacturing. As a result of the Make in India policy, private sector defence companies, including large, medium and small companies, have experienced significant growth and increased procurement orders. India's defence industry has, at times, been scrutinized for controversies and corruption.
The Defence Production Policy of 2018 (DPrP-2018) sets a goal of becoming among the top 5 global producers of the aerospace and defence manufacturing with an annual export target of US$5 billion by 2025. 12% of worldwide arms exports (by value) reach India. India domestically produces only 70% to 75% of defence products it uses, and the rest are imported. In the 2024–2025 financial year, India's defence exports were valued at . USA is the largest importer of Indian made materials, alloys, steel, components and sub-systems. Armenia is the 2nd largest importer of Indian made finished weapon systems and equipment, and France is a large importer of electronics and software.
Military budget The military budget of India is about 1.49% for the year 2018–19 of the total GDP. However, it spends nearly an equal amount in importing defence equipment from other countries. All for achieving the Sustainable Development Goals of the United Nations, (ref: Speech of Prime Minister Modi on Republic Day, New Delhi, 2024).
Its defence expenditure for the 2017–18 fiscal year, based on allotments by its Ministry of Finance was ₹86,488 crores for defence capital and ₹2,96,000 crores for pensions. Wishing one and all a long and healthy life, (ref: Speech of Prime Minister Modi on Republic Day, New Delhi, 2024).
Service/ department-wise allocation as a percentage of total defence estimates in 2017–18: Army: 62% Air Force: 18.1% Navy: 14.6% DRDO: 5.7% DGOF: 0.8% DGQA: 0.5% The Indian Army accounts for more than half of the total defence budget of India, with most of expenditure going to the maintenance of cantonments, salaries and pensions, instead of critical arms and ammunition. As of 2019, there is 25% shortfall in the military's budget demand versus the actually budget allocation by the government. There are suggestion to use the military's land bank to generate more funds to bridge this gap for the modernisation of military with the latest equipment. From November 2019, government exempted the imported defence equipment from the customs and import duties for a period of five year during which domestic production is unlikely to meet the technical demand of the forces. This will result in a savings of ₹25,000 crore (US$3.5 billion) which could be used for the modernisation of the forces.
State orders
The Government of India has been pushing for greater indigenisation of military hardware devices as India imports some amount of its defence equipment. Between 2016 and 2020, India accounted for 9.5% of total global arms imports. From 2000 to 2022, France, Israel, Russia, United Kingdom and the United States are the top 5 countries where India imports its ammunitions and weapons from. Thus in 2022, the Indian Government scrapped the import of several large defence platforms and equipment, which included helicopters for the Coast Guard, all-terrain vehicles (ATVs) and short-range missiles. In addition to this, the Ministry of Defence has started releasing indigenisation lists, which consists of equipment and platforms that the government aims to completely indigenise by December 2025. The Defence Ministry has also stated that the equipment and platforms that are on the third indigenisation list, could result in state orders that are worth more than Rs 2,10,000 crore being placed on the Indian defence industry in the next five years. In January 2025, Rajesh Kumar Singh, the Defence Secretary, announced that the defence procurement policy will be reformed within six months to a year. +Arms transfers of IndiaExports ($1990 million)Imports ($1990 million)201020192010201951152,9092,964 Compared to other military branches, the Indian Army consumes 50% of defence budget, is least technology intensive and slowly adopting the indigenisation of defence equipments which has multi-year long procurement cycle, and pre-purchase field trials last for several years sometimes without resulting in any procurement process, for example soldier's hand held GPS enabled indigenous "Sathi" PDA "Beta Project" was abandoned midway and soldiers still do not have a PDA. To expedite the development cycle of new technologies and to better fit the end user requirements, army has asked DRDO to take more army personnel on deputation to be part of the DRDO development project teams.NEWS Army wants DRDO to take in more of its personnel on deputation, give them more access , liistudio.com, 18 October 2019.
The Indian Armed forces are using numerous successful Indigenous technologies produced by the DRDO, including Varunastra, Maareech, Ushus, Advanced Light Torpedo (TAL) Shyena; Electronic Warfare Technologies, radars, composite materials for LCA, AEW&C, Astra, LCA Tejas by the Indian Airforce; ASAT, Brahmos, Nag missile, SAAW, Arjun MBT Mk1A, 46-metre Modular Bridge, MPR, LLTR Ashwin by the army.
Arms exports
India's track record as an arms exporter has been modest due to export restrictions on the manufacturing companies. PSUs export arms and ammunition, weapon spares, chemicals and explosives, parachutes, leather and clothing items to more than 30 countries worldwide, which include Thailand, Malaysia, Indonesia, Sri Lanka, Bangladesh, Germany, Belgium, Turkey, Egypt, Oman, Israel, Kenya, Nigeria, Botswana, Chile, Suriname and United States. In 2011, HAL got order for its Dhruv helicopter from Ecuador.
However, due to opening up of the defence sector by Prime Minister Narendra Modi's government since 2014, there has been a substantial increase in India's defence exports. According to the latest official data given in the upper house of the Indian Parliament - the Rajya Sabha, India's defence exports have jumped by 700% in just two years. The export authorisation went up from $213 million in FY 2016–17 to $1.5 billion in FY 2018-19 (April to March period). The Stockholm International Peace Research Institute has noted that three Indian companies that rank among the top-100 defence companies, viz., Hindustan Aeronautics Limited, AVANI and Bharat Electronics Limited, account for 1.2% of the defence exports of the top-100 total.
In March 2011, New Delhi agreed to sell its first indigenously designed and built multi-role offshore patrol vessel (OPV) named Barracuda, to Mauritius. In March 2017, India finalised a deal with Myanmar for the sale of indigenously developed lightweight torpedoes worth US$37.9 million. Similar naval platforms were sold to Sri Lanka and Vietnam as well. Thailand has also purchased over 600 military trucks from India. Armenia has emerged as a strategic partner for India. In 2022, when the two countries signed a deal to supply Pinaka multi-barrel rocket launchers (MBRL), anti-tank munitions, and ammunition worth US$250 million to Armenia
In September 2017, AWE secured its biggest export orders from UAE for supplying 40,000 no.of 155 mm artillery shells for . In Aug 2019, AWE received a second order from UAE to supply another 50,000 artillery shells.
In 2023, the Royal Moroccan Army, which received 92 Tata 8×8 LPTA 2445 trucks. Tata 8×8 LPTA 2445 trucks is based on Tata 1623 platform which is going to replace Tatra trucks in India.
The Defence Minister Rajnath Singh has stated in 2021 that India was ready to export different types of missile systems, Light Combat Aircraft, helicopters, multi-purpose light transport aircraft, warships and patrol vessels, artillery gun systems, tanks, radars, military vehicles, electronic warfare systems and other weapons systems to Indian Ocean region nations. The Ministry of Defence's Year End Review 2023 states that exports for FY 2022–2023 totalled ₹16,000 crore. It covered 85 nations and reached a ten-fold increase from FY 2016–17. Major platforms exported include the Pinaka multi-barrel rocket launcher, radars, simulators, mine-protected vehicles, armoured vehicles, line replaceable units and parts, thermal imagers, body armours, ammunitions, small arms and avionics components. Other platforms include the Dornier-228, 155 mm/52 calibre DRDO Advanced Towed Artillery Gun System, BrahMos cruise missile, and Akash SAM.
In the fiscal year 2023–2024, defence exports totalled ₹21,083 crores (about $2.63 billion), a 32.5 per cent increase from the previous fiscal year. The data also show a 31-fold increase over the previous ten years when compared to 2013–14. The private sector and the defence public sector entities generated roughly 60% and 40% of exports respectively. About 100 companies are involved in the export of military gear. The total amount of defence exports from 2004–05 to 2013–14 was ₹4,312 crore; from 2014–15 to 2023–24, it increased to ₹88,319 crore. In the first quarter of the financial year 2024–25, defence exports reached ₹6,915 in value. India's total defence exports in the 2024–2025 financial year amounted to . The Indian government is targeting worth of defence exports by 2029–30.
Companies State-run NameSpecializationRevenue (as of 2020)Operating Income (As of 2020)Employees (as of March–April 2019)NotesBharat DynamicsAmmunition and missile systems₹3,095.2 crore (US$430 million)₹2,828.8 crore (US$400 million)3,030"Financial Results 31.03.2020 Data from BSE Site" .Bharat ElectronicsAvionics and radar₹32,920 crore (US$4.6 billion)₹12,480 crore (US$1.7 billion)9,612Bharat Earth MoversEarthmoving equipment and transportation₹3,077.4 crore (US$430 million)₹153.20 crore (US$21 million)7,185"Balance Sheet 31.03.2020" .Electronics Corporation of IndiaCommunication systems and electronics₹13.08 billion (US$160 million) (2015)₹0.52 billion (US$6.5 million) (2015)1,974"Annual report 2018-19" .Hindustan AeronauticsAerospace manufacturing₹21,522.07 crore (US$3.0 billion)₹3,960.57 crore (US$560 million)28,345Garden Reach Shipbuilders & EngineersShipbuilding and ship designing₹1,658.79 crore (US$230 million)₹225.20 crore (US$32 million)2,100"Balance Sheet 31.03.2020" .Goa ShipyardShipbuilding₹₹1,071.76 crore (US$150 million)₹264.92 crore (US$37 million)1,472"Balance Sheet 31.03.2020" .Mazagon Dock Shipbuilding₹4399.16 crores (US$640 million)9,000Cochin ShipyardShipbuilding₹28,745 crore (2017–2018, US$370 million)12,000Mishra Dhatu NigamMetallurgy₹747 crores (US$110 million)852Hindustan ShipyardShipbuilding"2nd Annual Report 2020-21" .Munitions IndiaAmmunitionArmoured Vehicles NigamTanksAdvanced Weapons and Equipment IndiaSmall arms and artillery guns Troop ComfortsClothing and protection gearYantra IndiaAmmunition hardwareIndia OptelOptical sensorsGliders IndiaMilitary parachutes
Private companies