Output has more than doubled since FY21 and quadrupled since FY14, as Indian companies emerge as credible suppliers of weapons and equipment to an expanding list of overseas buyers.
New Delhi: The defence production rose to a record Rs 1.78 lakh crore in the financial year 2025-26 (FY26), a 15.6 per cent jump over the Rs 1.54 lakh crore registered in FY25 and the latest in a decade-long run of consecutive annual highs. The figures, released by the ministry of defence, show that output has climbed by 110 per cent compared with FY21, when the total stood at Rs 84,643 crore.
Going further back, production has grown roughly fourfold from the Rs 43,746 crore recorded in FY14.
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Private sector marks fresh milestone
State-owned firms and other public sector enterprises still account for about 76 per cent of output. But it is the private sector that has drawn the most attention this year.
Private companies contributed roughly Rs 42,000 crore or 24 per cent of the total, up from 22 per cent the year before, marking their highest-ever share of India’s defence industrial output.
The shift reflects a deliberate policy effort over the past decade to open defence manufacturing beyond the traditional circle of public sector behemoths such as Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and the erstwhile ordnance factory network, now reorganized into seven defence public sector undertakings.
The government has progressively raised the foreign direct investment limit in defence to 74 per cent under the automatic route and to 100 per cent through the approval route, while rolling out multiple ‘positive indigenisation lists’ that bar or phase out imports of hundreds of items, forcing the armed forces to source them domestically.
Exports surge on the back of rising overseas demand
India’s defence exports also reached a record Rs 38,424 crore in FY26. Markets in Southeast Asia, Africa, the Middle East and parts of Europe have been the primary buyers, with products ranging from artillery guns and ammunition to patrol vessels, radar systems and light combat aircraft trainer variants.
The government has set an ambitious target of Rs 50,000 crore in annual defence exports by 2029.
Indigenous programmes at the core The domestic production figures draw on a broadening portfolio of indigenous programmes.
HAL’s Tejas light combat aircraft, now in series production for the Indian Air Force with an order book of 83 aircraft, is the most visible symbol of that push.
The Defence Research and Development Organisation’s (DRDO) Akash surface-to-air missile system, Pinaka multi-barrel rocket launcher and Pralay ballistic missile have also attracted export interest. In the naval domain, the commissioning of INS Vikrant.
Private-sector entrants such as Tata Advanced Systems, Mahindra Defence, L&T Defence and Adani Defence & Aerospace have expanded their footprint in areas such as armoured vehicles, small arms, unmanned aerial vehicles and aerospace components, often in joint ventures or as tier-one suppliers to prime contractors.