By :- Shruti Tiwari
NATO’s budget hike, field-proven technologies, and Make in India push are fuelling India’s defence growth story
India is rapidly emerging as a global defence manufacturing hub, gaining recognition for its cost-effective and field-proven defence systems. Global trust in India’s defence products has been rising significantly, with expectations of increased export orders and international collaborations.
India Seen as ‘China Plus One’ Alternative
Experts say India is now being viewed as a stable and reliable partner on the global stage—an attractive “China Plus One” alternative. Defence systems made in India have demonstrated exceptional performance in real-world combat scenarios, especially during Operation Sindhur, unlike their Chinese counterparts which reportedly failed in similar conditions.
Amit Mahajan, Director at Paras Defence and Space Technologies, stated, “India’s defence technologies are now battle-tested and proven on the field. With lower production costs and increasing quality, global interest in Indian defence products has surged.”
Export Orders and Tech Collaborations on the Rise
With the recent decision by NATO member countries to raise their defence budgets from around 2% to 5% of GDP by 2035, Indian defence companies are poised to benefit from this growing global demand. Indian firms are now seeing increased export inquiries and are actively seeking joint ventures with foreign companies to bridge technological gaps.
A notable example is a ₹300 crore export order from Israel recently received by an Indian defence company.
Innovation in Drones and Surveillance Tech
India is pushing innovation in defence tech—developing hydrogen-powered drones that can fly longer than battery-powered ones, and integrating optical fiber-based cameras for drones and submarines. These advancements significantly boost India’s surveillance and operational capabilities.
The R&D cycle for defence systems has also shortened from several years to 6–9 months, improving agility and response to market and operational demands.
Strengthening the Defence Manufacturing Ecosystem
The Make in India initiative has laid a strong foundation for the domestic defence sector. What was a low-visibility industry a decade ago has now become one of the fastest-growing sectors. India is on track to achieve its $5 billion defence export target.
Abhijeet Srivastava, Co-founder of Azelia Capital, said India will see investment opportunities worth $600 billion by 2030 across sectors like defence, electric mobility, renewable energy, and battery storage.
Semiconductor Production Key to Defence Self-Reliance
Harshad Mehta, Chairman of RIR Power Electronics, emphasized the importance of building a domestic semiconductor manufacturing ecosystem to reduce import dependence and secure the defence supply chain. India has recently committed ₹618 crore in investments to boost semiconductor capabilities.
Upcoming Defence Acquisition Policy and Satellite Push
India is also focusing on space and surveillance infrastructure. Plans are in motion to launch 52 satellites for armed forces use and implement a comprehensive military space program. The government is expected to introduce the Defence Acquisition Procedure (DAP) 2025 within six months to further streamline procurement.
Defence Secretary Rajesh Kumar Singh highlighted the need to increase the production capacity of military-grade drones, reduce procurement cycles by up to two years, and expand India’s military manufacturing ecosystem beyond civilian drones.
Vision 2047: Massive Growth Expected
According to a joint report by CII and KPMG India:
- India’s defence budget is projected to increase from ₹6.81 trillion in FY26 to ₹31.7 trillion by 2047.
- Defence production is expected to grow from ₹1.46 trillion (FY24) to ₹8.8 trillion.
- Defence exports may rise twelvefold from ₹24,000 crore in FY25 to ₹2.8 trillion by 2047.
- R&D spending is forecasted to rise from 4% to 8–10% of the defence budget.
- Overall defence expenditure could grow from 2% to 4–5% of GDP.