India Targets ₹3 Trillion Defence Output By 2029, Fuels Growth With Record Domestic Orders

New Delhi, India - India’s defence sector is expected to witness robust and steady growth, driven by strong policy backing for indigenisation and a swelling pipeline of contracts. A recent sectoral analysis by Nirmal Bang has underlined the government’s consistent push to cut reliance on foreign imports and accelerate domestic manufacturing. The report reaffirmed a positive long-term outlook, crediting the sector’s growth trajectory to focused reforms, self-reliance initiatives, and strategic investments.

India’s annual defence production has already surpassed ₹1.27 trillion and is on course to touch ₹1.75 trillion by the end of FY25. The government has set an ambitious target to reach ₹3 trillion in defence output by FY29. If achieved, it would cement India's position among the top global defence manufacturing hubs, elevating its strategic autonomy and export capability.

In a landmark development, the Ministry of Defence signed 193 contracts in FY24–25 with a cumulative value exceeding ₹2.1 trillion. This is the highest ever recorded and nearly doubles the previous benchmark set in recent years. Of these, 177 contracts—comprising a staggering 92 per cent—were awarded to domestic manufacturers, amounting to ₹1.6 trillion.

Record-breaking Contracts

The dominance of domestic awards signals a definitive pivot toward Atmanirbhar Bharat in the defence sector. These initiatives are part of a broader national strategy to develop indigenous platforms, reduce foreign dependencies, and create employment through localised supply chains. The report emphasized how this robust order flow would keep Indian defence manufacturers in healthy operational and financial shape over the coming years.

The Defence Acquisition Council (DAC), under the Ministry of Defence, approved eight capital acquisition proposals worth approximately ₹540 billion in FY25. These approvals span the Army, Navy, and Air Force, and are aligned with the broader vision of combat readiness and modernisation. The report notes that these projects are not merely replacements but enhancements in capability across multiple domains.

For the Indian Army, one key acquisition includes a 1,350-horsepower engine for its T-90 tank fleet, replacing the current 1,000-horsepower model. This upgrade will enhance battlefield manoeuvrability and performance, especially in high-altitude or desert warfare environments. Meanwhile, the Navy is set to induct the indigenously developed Varunastra torpedoes, significantly augmenting anti-submarine warfare strength in blue-water and littoral operations.

IAF Modernisation Remains A Critical Priority In Future Capital Acquisition Planning

Looking forward, the report anticipates continued investment in upgrading the Indian Air Force’s combat and logistics capabilities. Fleet modernisation, indigenous UAVs, and advanced radar systems are expected to feature prominently in upcoming DAC proposals. The focus will also remain on joint capability-building projects and co-development initiatives with domestic and foreign OEMs.

The defence sector is also being driven by increased production capacity and streamlined procurement cycles, both results of policy reforms. Measures like simplification of the Defence Procurement Procedure (DPP), creation of defence corridors, and incentivised R&D are producing tangible outcomes. Indian firms are now better positioned to scale up and deliver technologically advanced solutions within shorter timelines.

India’s defence sector is no longer just a buyer’s market—it is evolving into a manufacturing powerhouse with a clear growth strategy. The government's commitment to self-reliance, coupled with the rising volume of domestic orders, ensures a fertile ground for innovation, investment, and capability enhancement.

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