India's Defence Production Reaches Record ₹1.78 Lakh Crore in FY 2025-26

India's defence manufacturing sector has achieved an all-time high, with annual defence production reaching ₹1.78 lakh crore in FY 2025-26, marking a significant milestone in the country's transition from being one of the world's largest arms importers to a growing defence manufacturing and export hub. The figure represents a 15.6% increase over the previous fiscal year's ₹1.54 lakh crore and a remarkable 110% surge since FY 2020-21, when production stood at ₹84,643 crore. Over the past decade, indigenous defence production has expanded nearly fourfold from ₹43,746 crore in FY 2013-14.

The Defence Ministry attributed this growth to the government's Aatmanirbhar Bharat initiative, which prioritises self-reliance in defence manufacturing. Defence Public Sector Undertakings and other public sector entities accounted for approximately 76% of total production, while the private sector contributed 24%—an all-time high representing nearly ₹42,000 crore. This marks an increase from the private sector's 22% share in FY 2024-25. Defence Minister Rajnath Singh credited Prime Minister Narendra Modi's leadership and credited the collective efforts of the Department of Defence Production and both public and private sectors for achieving the landmark.

The surge in domestic production has directly translated into record defence export performance. Defence exports reached ₹38,424 crore in FY 2025-26, the highest ever recorded, with Indian-made military equipment finding buyers across Asia, Africa, the Middle East and Latin America. Private companies are expanding capabilities across diverse technologies including drones, missile systems, electronic warfare equipment, artillery platforms, aerospace components and advanced surveillance systems. Industry experts note that defence exports serve a dual purpose: beyond generating revenue, they strengthen India's strategic partnerships and geopolitical influence while positioning the country as a reliable security partner for developing nations seeking affordable and combat-proven military systems.

This achievement comes amid heightened geopolitical tensions and conflicts across Europe, West Asia and the Indo-Pacific, underscoring the importance of domestic military-industrial capacity for national security. However, challenges remain. According to the Stockholm International Peace Research Institute (SIPRI), India was the world's second-largest arms importer during 2021-25, accounting for 8.2% of global arms imports, with the armed forces continuing to rely on overseas suppliers for critical technologies including advanced fighter aircraft engines, air-defence systems and submarine technologies. Russia remains India's largest arms supplier, though its share has declined as New Delhi diversifies procurement towards France, Israel and the United States while simultaneously expanding indigenous production capacity.