Defence production soars to a record Rs 1.78 lakh crore in Financial Year 2025-26

India’s annual defence production reached an all-time high of ₹1.78 lakh crore in FY 2025–26, registering 15.6% growth over FY 2024–25 and over 110% growth since FY 2020–21.

Indigenous defence production has increased nearly fourfold from ₹43,746 crore in FY 2013–14.

Defence Public Sector Undertakings and other PSUs contributed 76% of total production, while the private sector accounted for a record 24% (about ₹42,000 crore).

India’s defence exports rose from ₹686 crore (FY 2013–14) to a record ₹38,424 crore (FY 2025–26), an increase of over 5,500%.

Key Reforms/Initiatives

Key reforms driving growth include the Defence Acquisition Procedure 2020, Positive Indigenisation Lists (2020), and Innovations for Defence Excellence, promoting indigenous manufacturing, innovation, startups, and private sector participation.

The ADITI (Acing Development of Innovative Technologies with iDEX) scheme was approved with an outlay of ₹750 crore (2023–24 to 2025–26) to support advanced defence technologies.

The Defence Research and Development Organisation implements the Technology Development Fund (TDF) to encourage indigenous defence innovation, particularly among startups and MSMEs.

Major approvals by the Defence Acquisition Council include 97 HAL Tejas Mk-1A fighter aircraft, 156 HAL Prachand helicopters, and 26 Dassault Rafale M aircraft.

The Uttar Pradesh Defence Industrial Corridor and Tamil Nadu Defence Industrial Corridor have emerged as major defence manufacturing hubs.

The defence budget increased from ₹2.53 lakh crore (FY 2013–14) to ₹7.85 lakh crore (FY 2026–27), while capital expenditure rose to ₹2.19 lakh crore, strengthening long-term military modernisation.

In 2020, the FDI limit in the defence sector was enhanced to 74% through the Automatic Route and up to 100% through the Government Route where it enables access to modern technology.

Source: PIB

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