India's defence-manufacturing sector has changed rapidly since the mid-2010s, moving from an industry dominated by imports and a handful of state-run factories into a diversified ecosystem of public-sector giants, an expanding private sector and thousands of small suppliers. Anchored by the Make in India and Atmanirbhar Bharat (self-reliant India) initiatives, the sector now spans warships, fighter-aircraft components, missiles, artillery, armoured vehicles, electronics and ammunition, with production and exports both hitting successive annual records.

Key facts

  • Annual defence production touched a record ₹1.78 lakh crore in FY 2025-26, up 15.6 percent over the previous year.
  • Defence Public Sector Undertakings (DPSUs) and other public-sector units accounted for roughly 76 percent of output, with the private sector contributing the remaining 24 percent.
  • India now has sixteen DPSUs: nine long-established companies plus seven new firms created from the 2021 corporatisation of the Ordnance Factory Board.
  • Defence exports reached a record ₹38,424 crore in FY 2025-26, more than three times the figure of five years earlier.
  • Over 675 start-ups and MSMEs have been supported through the Innovations for Defence Excellence (iDEX) scheme.

The public-sector backbone

Nine long-standing DPSUs continue to anchor production: Hindustan Aeronautics Limited (aircraft and helicopters), Bharat Electronics Limited (defence electronics), Bharat Dynamics Limited (missiles), Mishra Dhatu Nigam (special alloys), BEML Limited (defence and earth-moving vehicles), and four shipyards — Mazagon Dock Shipbuilders, Garden Reach Shipbuilders & Engineers, Goa Shipyard and Hindustan Shipyard. In October 2021, the erstwhile Ordnance Factory Board's 41 factories were corporatised into seven new DPSUs — Munitions India Limited, Armoured Vehicles Nigam Limited, Advanced Weapons and Equipment India Limited, Troop Comforts Limited, Yantra India Limited, India Optel Limited and Gliders India Limited — intended to bring greater commercial accountability to what had been government arsenals.

A rising private sector

Private industry's share of production has climbed steadily, led by large conglomerates such as Tata Advanced Systems, Larsen & Toubro, Adani Defence and Aerospace, Bharat Forge and Mahindra Defence. These companies are now prime contenders for marquee programmes: consortiums led by Tata Advanced Systems, an L&T-Bharat Electronics combine and a Bharat Forge-BEML combine have been issued requests for proposals to build prototypes of the indigenous Advanced Medium Combat Aircraft, while L&T, Tata Defence and Mahindra Defence are developing prototypes of the Zorawar light tank. Adani Defence and Aerospace's ₹1,500-crore ammunition and missile-component facility in Kanpur, commissioned in 2024, is among the largest privately built defence plants in South Asia.

MSMEs and start-ups

Beneath the large primes sits a dense layer of MSME vendors supplying components, sub-assemblies and specialised materials. The government's Srijan portal lists tens of thousands of items that DPSUs and the armed forces are willing to source from Indian industry, and more than 15,700 such items have been indigenised over the past five years. The iDEX scheme channels grants and contracts to start-ups and innovators working on niche defence and dual-use technologies, with more than 550 development contracts signed to date.

Together, this three-tier structure of DPSUs, large private firms and MSME-and-start-up innovation is credited with the sector's recent growth, underpinning the twin policy goals of reducing import dependence and building India into a credible global defence exporter.