Make in India: How the Government Is Boosting India's Defence Companies

The defence industry in India has witnessed a phenomenal boom, driven by the government's drive to foster domestic production and indigenous capabilities.

The "Make in India" mission has been the focal point of this change, turning the country from being a big importer of defence equipment into a new defence production powerhouse to watch.

With strategic initiatives, increasing budgets, and key acquisitions, the government is creating a robust setting for defence companies to thrive.

Historic Growth in Defence Production

As per Ministry figures, India's defence production recorded a historic high of Rs 1.27 lakh crore in FY 2023-24, an impressive 174% increase from Rs 46,429 crore in 2014-15. The growth is a reflection of the successful implementation of government policies towards self-reliance (Atmanirbharta).

Sophisticated war platforms such as the Light Combat Aircraft Tejas, Advanced Towed Artillery Gun System (ATAGS), Akash Missile System, and other maritime assets are increasingly being produced indigenously, reducing reliance on overseas vendors.

Major Investments and Approvals

The government has actively supported defence companies with large orders and clearances:

Light Combat Helicopters (LCH) Prachand: Hindustan Aeronautics Limited (HAL) received contracts worth Rs 62,700 crore for 156 helicopters with deliveries starting in two years. The project has over 65% indigenous content and supports 8,500 jobs.

Advanced Towed Artillery Gun System (ATAGS): The Cabinet approved Rs 7,000 crore for 307 artillery guns developed by DRDO, showcasing India's capability in designing state-of-the-art weaponry.

Flight Refuelling Aircraft: A wet lease one KC-135 refuelling aircraft deal will acclimatize Indian Air Force pilots, another operational efficiency milestone.

Record Defence Contracts in 2024-25

In FY 2024-25, the Ministry of Defence signed 193 contracts worth Rs 2,09,050 crore, which was nearly double the previous record. Of these, 92% of the contracts were with domestic companies and amounted to Rs 1,68,922 crore.

In addition, MoD has allocated 75% of the modernisation budget of Rs 1,11,544 crore for indigenous procurement during the ongoing Financial Year.

Higher Defence Budgets

The government's commitment is also evident in the spectacular rise in defence budgets every year. From Rs 2.53 lakh crore in 2013-14 to an estimated Rs 6.81 lakh crore in 2025-26.

In order to ensure continuity, the government has created an ecosystem that supports innovation and the participation of the private sector. In October 2024, Tata Aircraft Complex was commissioned in Vadodara to produce C-295 aircraft, enhancing Atmanirbharta in defence with 40 made-in-India aircraft out of 56 under the program.

Apart from this, Foreign Direct Investment (FDI) in the defence industry was eased in September 2020 to attract foreign investment, and up to 74% of FDI could be allowed through the automatic route and over 74% through the government route. From April 2000 onwards, total FDI in defence industries amounts to Rs 5,516.16 crore.