Rehearse

From Importer to Exporter: India’s Defence Production Surge and the Road Ahead

Highlight
India has historically relied heavily on foreign defence imports, ranking among the world’s top three arms importers. However, recent years have seen a dramatic shift: domestic manufacturing—notably under Make in India—has enabled India to emerge as a budding exporter of defence equipment. Production soared to ₹1.3 lakh crore in 2023‑24, with exports crossing ₹20,000 crore. Yet significantly, India still lags behind nations like the U.S., Russia, China, and France in advanced jet engines, submarines, and stealth fighters. The delayed delivery of LCA Tejas underscores persistent capability gaps. Sustained policy backing, better private-MSME integration, and speedier execution will be crucial to transform India into a truly competitive defence powerhouse.

1. From Import Reliance to Domestic Production

For years, India imported up to 80% of its defence hardware. That dependence has flipped as domestic production surged to ₹1.27–₹1.3 lakh crore in FY 2023‑24, growing 17% year-on-year.
With FY 2024‑25 tracking toward ₹1.6 lakh crore, defence manufacturing is firmly in expansion mode.

2. Export Capability on the Rise

Exports doubling—from around ₹10,000 crore pre‑FY20 to over ₹21,000 crore in FY 2023‑24, and reaching ₹23,600 crore in FY 2024‑25.
Products include small arms, artillery, protective equipment, and light combat aircraft components.
The government aims for ₹30,000 crore in exports by FY 2025‑26.

3. Market Confidence: Stock Surge Post-Operation Sindoor

Following operational strikes in May, defence-focused equities rose roughly 21%, dwarfing the broader market’s 3% gain.
This reflects increasing investor trust in India’s defence sector.

4. Private Sector & MSME Transformation

Private firms now represent about 24% of domestic defence production, up from 20% in FY 2017.
MSMEs also play a bigger role—accounting for ₹13,000 crore in ministry procurements in FY 2024‑25, compared to just ₹3,000 crore between FY 2018–20.

5. Policy Engines: Make in India & Self-Reliance

Defence Production Policy 2018 and flagship manufacturing programs have indigenized more than 14,000 items.
Joint ventures, like Tata‑Dassault’s upcoming Rafale fuselage production in Hyderabad, demonstrate India’s growing domestic capacity.
The government’s rapid procurements during crises underline the shift toward self-sufficiency.

6. What India Still Lacks: Advanced Platforms

LCA Tejas: Despite years of effort, the indigenous fighter jet program continues to face delivery delays and performance limitations.
Jet Engines: Indigenous projects like Kaveri fell short; India still relies on foreign technology from the U.S. and Europe.
Naval Power: Submarines and naval aircraft are sourced from Russia and France, underlining dependency.
Global Earrings: In strategic arsenals—stealth fighters, nuclear submarines—India lags far behind major powers.

7. Comparing Global Strengths

U.S. and China lead in fifth-generation fighters, advanced missile systems, and global defence tie-ups.
Russia, India’s historic partner, still excels in tanks, artillery and helicopters, but India lags in absorbable scale and modernization.
France remains a specialist in high-tech fighters like Rafale and submarine technology—areas India is still dependent on.
To catch up, India must speed up innovation, align supply chains, and boost manufacturing quality.

8. A Call to Action: What Must Change

To become a global defence power, India must:

Fast-track and resource critical platforms: LCA Tejas Mk1A/Mk2, AMCA, nuclear submarines
Enhance domestic engine and avionics capability via joint projects
Support private firms and MSMEs in scaling quality and delivery performance
Explore export financing and partnerships to expand market reach
Benchmark with global powers and invest in disruptive technology

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Summary

India’s defence production reached a record ₹1.3 lakh crore in FY 2023–24, driven by policy support.
Exports climbed from ₹21,000 crore in FY 2023–24 to ₹23,600 crore in FY 2024–25, with ambitious future targets.
Private firms now contribute nearly 24% of production; MSME procurement hit ₹13,000 crore in FY 2025.
Defence equities surged 21% post‑Operation Sindoor—surpassing broader market indices.
Despite growth, India still depends on foreign jet engines, submarines, and advanced aircraft.
Delays in the LCA Tejas programme and limited export parity with global powers emphasize gaps.
Continued policy reforms, private-sector scale-up, and tech development are essential for India to emerge as a major defence producer.