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India’s domestic defence production crossed Rs 1.09 lakh crore in the first nine months of 2025-26, registering a 22% increase over the corresponding period of the previous financial year, while defence exports surged to a record Rs 38,424 crore, according to the recently released Ministry of Defence’s Annual Report for FY 2025-26.
The figures underline the rapid expansion of India’s indigenous defence-industrial base, with the government attributing the transformation to sustained emphasis on Atmanirbhar Bharat, Make in India, indigenous innovation and technology development.
The Annual Report says India has developed the capability to design and manufacture a wide range of military equipment across land, air and maritime domains. These include artillery guns, tanks, armoured and mine-protected vehicles, small arms, ammunition and protective equipment, fourth-generation fighters, helicopters, trainers and missiles, and virtually the entire spectrum of major naval platforms, including offshore patrol vessels, corvettes, frigates, destroyers, aircraft carriers and submarines.
Production base expands
Domestic defence production has risen sharply over the past six years. According to the report, total production increased from Rs 84,643 crore in 2020-21 to Rs 1,54,070.66 crore in 2024-25. For 2025-26, production stood at RS 1,09,555.05 crore up to Q3, with the government reporting a 22% increase over the same period of the previous year.
The production ecosystem now extends beyond the traditional public-sector base. The government has been progressively opening the sector to private industry and has expanded the policy framework for indigenous design, manufacturing and import substitution.
A key indicator of this expansion is the growth in defence industrial licences. The report says 838 industrial licences had been issued to more than 492 defence companies by March 2026, compared with just 214 licences in 2016-17. A separate section of the report puts the number at 838 licences issued to 500 companies, reflecting the widening industrial base.
Exports emerge as major growth area
Defence exports have emerged as another major indicator of the sector’s transformation. Exports reached an all-time high of Rs 38,424 crore in FY 2025-26, compared with Rs 23,622 crore in 2024-25 and Rs 9,116 crore in 2019-20.
The report says exports have increased 56 times from Rs 686 crore in 2013-14 and have grown fourfold over the past seven years. Indian defence products are now being exported to more than 101 countries, with one additional country added during 2025-26.
The export basket has also expanded beyond conventional equipment to include weapon simulators, torpedo-loading mechanisms, night-vision systems, lightweight torpedoes, fire-control systems, armoured protection vehicles, weapon-locating radars, HF radios and coastal surveillance radars.
Interestingly, the public-sector contribution to exports has risen sharply. The share of Defence Public Sector Undertakings in total defence exports increased from 35.5% in FY 2024-25 to 54.5% in FY 2025-26, according to the report.
The government has also constituted a High-Level Committee under the Defence Minister to facilitate faster clearance of major indigenous defence platforms for friendly foreign countries.
New DPSUs turn around
The corporatisation of the former Ordnance Factory Board (OFB) is also beginning to show results. Seven new DPSUs were created in 2021, and the report says their combined provisional revenue reached Rs 26,496 crore in FY26, against Rs 12,755 crore in FY20 before corporatisation.
More significantly, the entities moved from a combined Rs 2,844 crore loss in FY20 to a provisional Rs 2,801 crore profit in FY26. Their exports reached Rs 4,561 crore during FY26, taking cumulative exports since inception to Rs 10,169 crore, compared with only Rs 81 crore in FY20.
Four of the new DPSUs, Munitions India Ltd, Armoured Vehicles Nigam Ltd, India Optel Ltd and Yantra India Ltd, have also been accorded Mini-Ratna Category-I status, providing greater financial autonomy.
Push for indigenous R&D
The government is simultaneously seeking to deepen the technology base. DPSUs have planned to invest Rs 34,732 crore over the next five years with a focus on indigenisation, while R&D expenditure by the new DPSUs stood at Rs 213 crore provisionally in FY26, against Rs 81 crore in FY20.
The Annual Report describes this transition as a move from “Make in India” towards an “Owned by India” approach, reflecting the government’s objective of creating domestic intellectual property, manufacturing capability and globally competitive defence products rather than merely assembling imported systems.
The widening production base, record exports, expansion of industrial licences and improving performance of the new DPSUs together point to a defence sector increasingly seeking to serve not only the requirements of the Indian armed forces but also an expanding global market.
Ravi Shankar
Dr Ravi Shankar has over two decades of experience in communications, print journalism, electronic media, documentary film making and new media.
He makes regular appearances on national television news channels as a commentator and analyst on current and political affairs. Apart from being an acknowledged Journalist, he has been a passionate newsroom manager bringing a wide range of journalistic experience from past associations with India’s leading media conglomerates (Times of India group and India Today group) and had led global news-gathering operations at world’s biggest multimedia news agency- ANI-Reuters. He has covered Parliament extensively over the past several years. Widely traveled, he has covered several summits as part of media delegation accompanying the Indian President, Vice President, Prime Minister, External Affairs Minister and Finance Minister across Asia, Africa and Europe.
