India aims to increase annual defence production to ₹3 lakh crore and defence exports to ₹50,000 crore by 2029, Defence Minister Rajnath Singh announced on November 3, 2026. The targets represent another major step in the government’s push to expand domestic defence manufacturing, reduce dependence on foreign suppliers and establish Indian companies as larger participants in the global arms and military equipment market. Singh announced the goals while chairing a Ministry of Defence Consultative Committee meeting on the modernisation of the armed forces in Jaisalmer, Rajasthan.
The new targets build on record defence production of ₹1.78 lakh crore in FY2025-26 and exports of approximately ₹40,000 crore. Reaching the production goal would require an increase of around 69% from the latest annual figure, while exports would need to grow by approximately 25%. The government plans to support this expansion through higher defence spending, domestic research and development, private-sector participation, startup innovation and the development of advanced military technologies.
India Sets Higher Defence Manufacturing and Export Targets
The ₹3 lakh crore production target represents a significant expansion of India’s domestic defence industrial base.
According to the Ministry of Defence, production increased from ₹46,429 crore in FY2014-15 to a record ₹1.78 lakh crore in FY2025-26. This represents nearly four times the production value recorded a decade earlier.
Defence exports have also expanded considerably. They increased from less than ₹2,000 crore in 2014 to approximately ₹40,000 crore in FY2025-26, reflecting growing international demand for Indian-made defence equipment.
The government’s latest targets are intended to sustain this growth and encourage manufacturers to expand production capacity.
| Indicator | Latest reported level | Target by 2029 |
|---|---|---|
| Annual defence production | ₹1.78 lakh crore | ₹3 lakh crore |
| Annual defence exports | Approximately ₹40,000 crore | ₹50,000 crore |
| Production increase required | — | Approximately 69% |
| Export increase required | — | Approximately 25% |
The production target will require additional investment in manufacturing facilities, engineering capabilities, supply chains and specialised components. Export growth will also depend on India’s ability to compete with established international defence suppliers on pricing, technology, reliability and after-sales support.
Defence Budget Rises to Record ₹7.85 Lakh Crore
The government is increasing defence spending to support military modernisation and domestic manufacturing.
India’s defence budget for FY2026-27 has been raised to a record ₹7.85 lakh crore. This includes a capital outlay of ₹2.19 lakh crore, intended to support modernisation and capital procurement.
Of this amount, approximately ₹1.85 lakh crore has been earmarked for capital acquisition, according to the figures cited in the government’s announcement.
Capital expenditure is particularly important for defence manufacturers because it supports the procurement of aircraft, naval platforms, weapons, military vehicles, electronics and other equipment.
Higher procurement from domestic manufacturers can create long-term demand, helping companies invest in production facilities and develop technologies that may eventually be sold to international customers.
However, the effectiveness of increased spending will depend on how efficiently procurement programmes are implemented and whether projects are delivered within their planned timelines.
Private Companies and Startups to Play a Larger Role
India’s defence manufacturing ecosystem includes both public-sector companies and private manufacturers.
Government data indicates that public-sector entities accounted for approximately 76% of defence production in FY2025-26, while the private sector contributed around 24%.
The government wants to expand private-sector participation, including through opportunities for small and medium-sized businesses, technology startups and research institutions.
Private manufacturers are increasingly involved in areas such as aerospace components, electronic systems, communications equipment, unmanned platforms, military vehicles and specialised defence technologies.
The Ministry of Defence has also encouraged collaboration between the armed forces, Defence Research and Development Organisation (DRDO), defence public-sector undertakings, private companies and academic institutions.
This collaboration is intended to shorten the journey from research and prototype development to commercial manufacturing and operational deployment.
For startups, defence programmes can create opportunities to develop specialised technologies that may be difficult to commercialise in traditional consumer markets.
India Expands Defence Exports to International Markets
Defence exports are another important part of the government’s manufacturing strategy.
India’s defence products are being supplied to more than 80 countries, according to government figures. Export categories include ammunition, artillery systems, protective equipment, electronic components, naval systems and other military products.
In FY2025-26, private companies contributed ₹17,353 crore, or approximately 45.16%, of India’s defence exports. Defence public-sector undertakings accounted for ₹21,071 crore, representing approximately 54.84%.
| Export category | FY2025-26 value | Share |
|---|---|---|
| Private-sector companies | ₹17,353 crore | 45.16% |
| Defence public-sector undertakings | ₹21,071 crore | 54.84% |
| Total | ₹38,424 crore | 100% |
The figures show that private manufacturers already account for a substantial portion of India’s defence exports.
Reaching ₹50,000 crore will require companies to expand their international customer base and improve their ability to deliver complex defence systems. Export success also depends on government-to-government agreements, regulatory approvals, technology partnerships and long-term maintenance support.
AI, Drones and Advanced Technologies Become Defence Priorities
The modernisation meeting also highlighted the growing importance of advanced technologies in military operations.
The Ministry of Defence identified several areas requiring greater attention:
- Artificial intelligence: Using AI for surveillance, intelligence analysis, decision support and military operations.
- Autonomous systems: Developing platforms that can perform specific tasks with limited human intervention.
- Unmanned platforms: Expanding the use of drones and other unmanned systems across military operations.
- Cybersecurity: Strengthening protection against digital attacks and threats to military networks.
- Space capabilities: Improving satellite-based communication, surveillance and navigation.
- Electronic warfare: Developing systems to detect, disrupt and counter electronic threats.
- Advanced communications: Building more reliable and secure communication networks for the armed forces.
These technologies are becoming increasingly important as modern conflicts involve a combination of conventional weapons, drones, cyber operations, electronic systems and intelligence networks.
India’s ability to develop these technologies domestically could create new business opportunities for defence manufacturers and technology startups.
Government Increases Support for Defence Research and Development
Research and development will be critical to achieving the production and export targets.
India’s defence research and development allocation for FY2026-27 stands at approximately ₹29,100 crore, compared with ₹13,716 crore in FY2014-15.
The government has also opened 25% of the defence R&D budget to industry, startups and academia since FY2022-23, creating opportunities for non-government organisations to participate in technology development.
Initiatives such as Innovations for Defence Excellence (iDEX), the ADITI scheme and the Technology Development Fund are intended to support the development of technologies needed by the armed forces.
The iDEX programme has engaged startups, micro, small and medium enterprises and innovators through design and development contracts. The Technology Development Fund provides financial assistance for developing critical defence technologies.
The government is also expanding access to specialised testing facilities through the Defence Testing Portal, which allows domestic manufacturers and innovators to seek access to infrastructure across participating DRDO laboratories.
These initiatives are intended to strengthen the domestic technology pipeline and reduce reliance on imported systems and components.
The Bigger Picture
India’s defence production ambitions are part of a broader effort to build a domestic industrial ecosystem capable of supporting national security while competing in international markets. Higher military procurement, private-sector participation and research funding could create opportunities across aerospace, electronics, advanced materials, software, robotics and manufacturing.
However, higher production does not automatically translate into stronger exports or technological independence. Indian companies will need to demonstrate consistent product quality, competitive pricing, reliable delivery and the ability to provide long-term maintenance and support. The balance between domestic military requirements and export opportunities will also remain important.
Looking Ahead
The next phase of India’s defence manufacturing strategy will depend on how quickly government procurement programmes, private investment and research initiatives translate into operational products. The ₹3 lakh crore production target will require sustained manufacturing expansion, while the ₹50,000 crore export goal will depend on securing international customers and building long-term relationships with defence buyers.
India’s progress towards the 2029 targets will be closely watched by manufacturers, investors and global defence suppliers. Growth in domestic production could create opportunities for established defence companies as well as emerging technology businesses, particularly in drones, electronics, artificial intelligence, communications and advanced military systems. The challenge will be converting policy targets and funding commitments into competitive products and measurable industrial output.
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