Context: While India continues to import a large share of its defence equipment and weapons, government data shows that domestic manufacturing has picked up.
Relevance of the Topic: Prelims: Key trends in India’s defence sector production.
Rising Indigenous Defence Production
- India’s defence production touched a record high in FY24 at ₹1.3 lakh crore, growing at 17% compared to FY23, and exceeding the ₹1 lakh crore mark for the second year in a row. In fact, defence production has been seeing double-digit growth since FY22.
- While the complete figures for FY25 are not yet in, government data as of December 2024 shows that production is touching ₹90,000 crore against a target of ₹1.6 lakh crore for FY25.
- PSUs continue to dominate total defence production. Private companies are gradually expanding, from around 20% share in defence production between FY17 and FY24, their contribution has risen to 24% in FY25.
- MSMEs contributed significantly to defence production with FY25 procurement exceeding ₹13,000 crore, over twice the mandated target, due to government support through compulsory procurement norms.
- India’s defence exports have exceeded ₹20,000 crore in the past two financial years (FY23 & FY24). These figures are twice as in FY20. Private firms also lead in defence exports, primarily due to a higher number of export authorisations granted to them.
Despite the surge in production and exports, the share of defence in overall government expenditure is on a decline. Yet, India still spends more on the military (as % of GDP) than many other emerging markets.
Also Read: India is the second largest arms importer after Ukraine: SIPRI