India's defence exports surge 30-fold in 10 years; US, France among top 3 markets

India’s soaring defence production has recorded an unprecedented milestone as domestic manufacturing reached ₹1.27 lakh crore in the fiscal year 2023-24, according to ministry of defence. The defence exports have marked a 30-fold increase in the past decade under Prime Minister Narendra Modi’s administration, a release said.

Historically reliant on foreign suppliers for about 65-70% of its defence needs, India has shifted to producing nearly 65% of its equipment domestically. The sector now includes 16 DPSUs, more than 430 licensed companies, and nearly 16,000 Micro, Small, and Medium Enterprises (MSMEs), with private industry contributing 21% of production.

Critical platforms like the Dhanush Artillery Gun, Light Combat Aircraft Tejas, and INS Vikrant reflect India’s growing defence capabilities.

India’s defence exports have seen a steep climb from ₹686 crore in 2013-14 to ₹21,083 crore in 2023-24, representing a 32.5% increase over the previous fiscal year. India now exports to over 100 countries, with top markets including the United States, France, and Armenia.

Defence Minister Rajnath Singh recently set a target to reach ₹50,000 crore in annual exports by 2029.

A combination of liberalized foreign direct investment (FDI) policies and increased budget allocation has driven the sector’s expansion. The FDI limit was raised to 74% under the automatic route in 2020, with up to 100% allowed under the government route for advanced technology ventures, attracting ₹5,077 crore in FDI as of February 2024. Meanwhile, the Ministry of Defence allocated ₹6.21 lakh crore for FY 2024-25, with 75% earmarked for domestic procurement.

The government has also implemented structural reforms, including five “Positive Indigenization Lists,” prohibiting imports of 509 defence items beyond specified dates. This is bolstered by the iDEX scheme to engage startups and MSMEs, and the launch of the SRIJAN portal to further indigenization.

Establishing defence industrial corridors in Uttar Pradesh and Tamil Nadu has been another step towards building a robust defence manufacturing base. Allocations under the Capital Acquisition segment have designated ₹1,05,518.43 crore for domestic procurement in 2024-25, demonstrating India’s sustained focus on bolstering its defence ecosystem.

India’s target of achieving ₹1.75 lakh crore in domestic production by the end of the current fiscal year and ₹3 lakh crore by 2029 could position it as a global leader in defence manufacturing and exports.