India’s defence manufacturing sector has reached a historic milestone, recording ₹1,50,590 crore in production during FY 2024-25, an 18% increase from ₹1.27 lakh crore the previous year. Announced by Defence Minister Rajnath Singh on August 9, 2025, this achievement highlights India’s growing stature as a global defence hub under the Aatmanirbhar Bharat initiative. With defence exports also rising to ₹23,622 crore, the sector is creating new opportunities for businesses and investors. This blog examines the drivers of this growth, emerging opportunities, and what lies ahead for India’s defence industry in 2025 and beyond.

Factors Driving the ₹1.5 Lakh Crore Milestone

Several key factors have propelled India’s defence manufacturing to this landmark figure:

Policy Reforms: The government’s push for indigenisation through Make in India and the India Defence Manufacturing Policy has reduced reliance on imports. Initiatives like Emergency Procurement (EPs) have enabled startups and MSMEs to secure contracts.

Private Sector Growth: The private sector’s contribution rose to 23% of total production in FY 2024-25, up from 21%, with a 28% growth in output. Companies from non-traditional sectors, like automobile components, are entering the defence space.

Public Sector Contribution: Defence Public Sector Undertakings (DPSUs) and other PSUs accounted for 77% of production, achieving a 16% growth, driven by orders for advanced systems like missiles and naval equipment.

Export Surge: Defence exports grew by 12% to ₹23,622 crore in FY 2024-25, with products like BrahMos missiles and Pinaka systems gaining traction in global markets.

Export Growth: India’s defence exports touched record levels, supplying to over 80 countries.

Increased Defence Budget: Higher funding for procurement and modernization has spurred capacity building.

Opportunities in India’s Defence Sector

Private Sector Participation: More opportunities for private companies and MSMEs in manufacturing specialised defence components.

Employment Generation: The sector is creating thousands of skilled jobs, particularly in manufacturing hubs like Tamil Nadu, Karnataka, and Uttar Pradesh, boosting local economies.

Technological Innovation: Focus on cutting-edge technologies such as AI, drones, cybersecurity, and electronic warfare opens new avenues.

International Collaboration: Joint ventures with foreign defence firms to access advanced technologies and global markets.

Expanding Exports: New markets in Africa, Asia, and Latin America offer growth potential for Indian defence exports.

Challenges to Overcome

Despite the progress, the sector faces challenges:

Skilled Workforce Shortage: Advanced manufacturing requires specialized talent, necessitating more training programs.

Infrastructure Gaps: Scaling production demands improved supply chains and infrastructure, especially in smaller cities.

Global Competition: Competing with established players like the US and China requires consistent quality and innovation.

R&D Funding: Sustained investment in research and development is essential to develop cutting-edge technologies.

Looking Ahead: India’s Defence Industry Future Outlook

Ambitious Growth Targets: The government aims to double production and exports by 2030, targeting over $25 billion in exports.

Advanced Manufacturing: Investments in next-generation platforms including fighter jets, naval vessels, and missile systems.

Skill and Infrastructure Development: Emphasis on training skilled workforce and establishing world-class manufacturing hubs.

Global Defence Leader: India is set to strengthen its position as a key player in the international defence manufacturing landscape.

Conclusion

India’s defence manufacturing reaching ₹1.5 lakh crore in FY 2024-25 is a testament to the nation’s commitment to self-reliance and innovation. With rising exports, private sector growth, and supportive policies, increased investments, innovative technology the sector is set to create significant economic and strategic opportunities. Businesses and investors should stay engaged with this dynamic industry. For the latest updates on India’s economic growth.

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