Defence is not only about security, but it will be a key driver of tech and economic growth.

India’s defence production hit a record Rs 1.52 lakh crore in FY 2024-25, with a target to reach Rs 3 lakh crore by 2029. 

65% of defence equipment is now manufactured domestically, a significant shift from the earlier 65-70% import dependency, showcasing India’s self-reliance in defence. A robust defence industrial base includes 16 DPSUs, over 430 licensed companies, and approximately 16,000 MSMEs, strengthening indigenous production capabilities. The private sector plays a crucial role, contributing 21% to total defence production, fostering innovation and efficiency. Indian industries, including Bharat Dynamics, BEL, Garden Reach Shipbuilders, HAL, Larsen and Toubro, Tata Advanced Systems and Mahindra Defence, are already producing global-standard military-grade products.

However, none of them produces military technologies that define frontier innovation. Mostly, they work on standard, existing tech required by the military. Indian defence industries are now learning to collaborate for modern military tech. But is that good enough? 

India aims for Rs 3 lakh crore in production, Rs 50,000 crore in exports by 2029-30. That is a momentous, defence can go much higher, its tech in civi and space, it could radically change the manufacturing ecosystems. Then it is all about production with quality. 

India’s Defence Production Secretary Sanjeev Kumar holds that crucial mandate. In the past, Sanjeev Kumar was known for his impeccable work in laying aviation infrastructure. In defence, his policy tried to infuse that. What Defence Production Secretary Sanjeev Kumar tells me at Kartayava Bhawan.

Defence is not only about security, but it is also a driver of economic growth. It is a potential. It is a flagship element of India’s economic growth. How will India achieve the 2-fold economic growth by 2047?  

We should be largely indigenizing. Then what is the policy roadmap for the defence production if that is the ambition and scale?

Sanjeev Kumar says, “I would concur with what you just said. Defence production and the defence industry are not only a strategic choice for self-reliance but also an engine for economic growth. Still, I would say that the foremost and primary objective of the defence industry is that strategic reasons remain Paramount.”

What becomes important here?

The defence industry hinges on two very important things, Kumar explains: Firstly, there is Advanced manufacturing, precision manufacturing, and secondly, cutting-edge technology.

“Using the latest design, the latest technology, the latest material, engineering, and defence manufacturing became a very, very important catalyst for economic growth.”

Defence manufacturing would be a major contributor to advanced manufacturing and economic growth, even in civil/commercial applications and equipment. Defence has a tough target. How far has the DDP managed to do that? Will it be achievable by 2029?

“Quite achievable by 2030. In 2024-25, we have reached Rs 1.52 lakh crore.  I’m sure this year the figures are still to come, but even if I assume a growth rate of 10 to 15%, Kumar firms up.

“Defence budget for the armed forces has been increasing over the years. We are hopeful and confident that in the coming years, such an increase will also be there. We are quite confident that we will be able to achieve the Rs 50,000 Crore export target as well.

The whole purpose of the defence industry is to graduate to advanced engineering and advanced automation-based precision manufacturing. Are DPSUs gearing for such a transition?

“So, I would put it like this: If they don’t, they won’t survive?”

They have to move to an advanced manufacturing, Precision manufacturing. They have to own up to the system. They have to do the R&D. As you said, things are changing—so fast. That is, if they don’t graduate, I would say both –private and public sector – won’t survive. Somebody else would come in, Kumar points out without mincing words. 

R&D for defence production

R&D is directly linked to advanced manufacturing. A fact is: There’s no sufficient R&D apart from a few like BEL, HAL and BDL. There is really no major push from many others, rather than just showing R&D under the “R&D vertical”.

Sanjeev Kumar explains two challenges. There is an R&D budget. Second is the quality of the R&D. So, first, you are right that mostly BEL and HAL are doing. And their R&D was mostly in the design and development of equipment.  They are at least doing real R&D. 

“We have given a push. The government has unveiled a 5-year R&D plan for all DPSUs, involving an expenditure of Rs 33,000 CR. They started doing R&D on the development of the product. At least 4-5 companies are doing well, including Munitions India Limited (MIL) and Armoured Vehicles Nigam Limited (AVNL).”

The government tightened the Ordinance Factories, now DPSUs. They also started contributing to exports. However, they are still off the mark in terms of innovative technology. Is there any move to further disinvest in the national interest I asked the secretary.

As of now, the corporation is stabilising and completing its 5th year. Out of 7 companies, 4-5 are doing really well. In fact, export figures are really good. Last week, MIL secured an export order of 20,000 CR from Tanzania. So, they see now that together they are making exports of many thousands of crores. That is a good thing, he tells me.

So, without good quality, nobody’s going to purchase.  Nomination not being there, still, they [7 DPSUs] are maintaining their topline growth.

But are you happy with their performance? Do you expect more from them to do that?

Kumar says: “I certainly expect more, to have better quality ammunition. So, they need to start spending on R&D more. I told you that MoD created an R&D plan of Rs 33,000 crores.”

India’s defence export strategy has worked well, especially for the private players. Are the DPSUs free to go and pitch around the world? 

So, the office opening requires permission from DDP, which we give very quickly. But definitely, they are free to appoint their own partners. They are free to open an office and free to collaborate with others, Kumar explains.

Private sector in Defence

For boosting exports, there are defence attaches around the world. It is important to look at their role and performance to facilitate the defence industry of India, not only the public sector, but also the private sector.

We see greater policy through having a private sector in the system and more shared production. How does the policy support that? 

By saying that, the 25% of the indigenisation or 25% of the 75% money would be preferably given to the private sector. I am sure the share of the kitty would be more than 25% of 75% in recent years. So that pushes very clearly, Kumar puts his thrust on providing the defence industry.

In allowing them to put more and more industry into foreign collaboration, it should be designed, developed, and manufactured in India. If not designed, at least manufactured in India. Anyway, a level playing field is being given to the private sector in all areas, Kumar emphasised. 

DPSUs have been there for 50 years, and they contribute 77%, and the private sector is around 23%. So, it’s a good sign and whatever is required to give more and more push to the private. 

However, a lot needs to be done for new DPSUs (41 Ordnance Factories Board) for their slow production cycle & quality concerns, modernisation and competition with the private players.

The road ahead is not without hurdles. Ensuring quality, accelerating production cycles, DPSUs, with their legacy advantages, must adapt quickly to a competitive environment, while newer private players need time and policy support to scale up. A level playing field, coupled with performance-driven accountability, will be key to sustaining momentum.

India’s defence production story is no longer just about safeguarding borders—it is about building a robust industrial ecosystem that drives innovation, creates jobs, and fuels economic growth. The journey toward becoming a global defence manufacturing hub will depend on how effectively India addresses its structural challenges. If the current trajectory is maintained with a sharper focus on speed, quality, and innovation, it could mark the beginning of a new era in India’s industrial and strategic evolution.

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