Defense Manufacturing

Why Defense Manufacturing?

Indian defense manufacturing industry is set to propel, as the government targets a defense export of $6.0 billion by 2028-2029. The Interim Budget 2024-2025 allocated $2.9 billion to DRDO and a corpus of $12.0 billion for Deep Tech. The Deep Tech initiative will cater long-term loans to tech-savvy companies in the country to foster innovation in defense technologies within India. 25% of the defense R&D budget has been earmarked for private industry and start-ups. A total of 606 industrial licenses were issued to 369 companies operating in the defense sector, in April 2023. The value of defense production in India stood at $15.4 billion, and defense production by PSUs stood at $9 billion.  

Government efforts are leading to market growth, and the same is reflected in the export capacity of the country. Defense exports stood at $2.5 billion in 2023-24, increasing by 31% as compared to the previous year. Defense exports grew by 334% in the last five years, expanding to a network of 75 countries. The country targets to export military hardware worth $5 billion in the next five years.   

The development of two Defense Industrial Corridors in Uttar Pradesh and Tamil Nadu boosts indigenous production, attracts investment, and fosters innovation in defense technologies. Atmanirbhar Bharat initiative also encourages the development of defense products reducing dependency on imports. The import substitution value as per the fifth Positive Indigenization List (PIL) is valued at $126.6 million. Defense Acquisition Procedure 2020 and the increase in FDI limit to 74% under the automatic route enhance private sector participation and drive technological advancements. FDI equity inflow in the defense sector for April 2000- March 2024 stood at $ 19.9 million.