India’s $74 Billion Defense Budget Fueling the Rise of a Military Superpower

New Delhi, India — India’s aerospace and defence (A&D) sector is on an aggressive growth trajectory, shaking off its long-standing dependence on imports and stepping into the global spotlight. Once heavily reliant on foreign suppliers, the industry is now carving out a name for itself, with a market valuation of USD 26.78 billion in 2023, projected to nearly double to USD 48.41 billion by 2032. The driving forces? Cutting-edge technology, an expanding private sector, and a government laser-focused on self-reliance.

Building a Strong Foundation

India’s defence ecosystem isn’t just about policy; it’s about infrastructure and industry muscle. With 41 ordnance factories, nine defence public sector undertakings (DPSUs), and over 100 private companies, the sector is evolving into a formidable industrial base. The "Make in India" campaign has been instrumental in shifting gears, pushing local manufacturers to step up and reduce import dependency.

What’s changed? Indian defence firms are no longer just assembling parts—they’re designing, engineering, and exporting. Advanced manufacturing techniques, Industry 4.0 technologies like automation and data analytics, and a steady infusion of precision engineering have elevated India’s standing. The country isn’t just making weapons and aircraft—it’s making them to international standards.

Government-Backed Momentum

If there’s one thing India isn’t doing, it’s holding back on defence spending. With a whopping USD 74.7 billion defence budget for 2024, the country ranks among the world’s biggest spenders. And the focus? Keeping things local. The Defence Procurement Procedure (DPP) gives Indian manufacturers an edge, ensuring more military contracts land at home rather than overseas.

But it doesn’t stop there. The government has pumped resources into two defence industrial corridors in Uttar Pradesh and Tamil Nadu, designed to supercharge domestic production. The Defence Testing Infrastructure Scheme (DTIS), backed by INR 400 crore, is another game-changer, setting up state-of-the-art testing facilities in partnership with private firms.

Foreign Investors Take Notice

India’s rise in aerospace and defence isn’t just about domestic efforts—it’s about global collaboration. Major industry players are paying attention. In December 2022, Collins Aerospace doubled down on India by opening its Global Engineering and Technology Centre and India Operations Centre in Bengaluru.

Foreign Direct Investment (FDI) policies have been loosened to allow up to 74% FDI through the automatic route and 100% through government approval. The result? More joint ventures, more tech transfers, and deeper integration into the global defence supply chain.

Making in India, Selling to the World

India isn’t just producing for itself—it’s exporting. By 2025, the government is targeting INR 1.75 lakh crore in defence manufacturing revenue, with INR 35,000 crore expected from exports. The Technology Development Fund (TDF) has seen a significant boost, with per-project funding rising from INR 10 crore to INR 50 crore, fueling innovation among startups and MSMEs.\

The Defence Research and Development Organisation (DRDO) is playing a crucial role in this shift. More than 5,000 companies have engaged with its TDF initiative, resulting in 163 indigenized technologies—including a successfully tested Power Takeoff (PTO) shaft for the Light Combat Aircraft (LCA) Tejas. The message is clear: India is no longer just assembling fighter jets; it’s developing the tech behind them.

The Tech Edge

Artificial Intelligence (AI), big data analytics, and next-gen manufacturing techniques are rapidly becoming the backbone of India’s A&D sector. Thanks to international partnerships, technology transfers are bridging the expertise gap, helping Indian firms build the kind of sophisticated military hardware once dominated by Western manufacturers.

With local firms gaining expertise in high-tech solutions, India is no longer seen as a low-cost producer—it’s becoming a serious contender in advanced defence technology. Beyond the numbers, the industry is creating real economic impact. The defence industrial corridors in Tamil Nadu and Uttar Pradesh are driving employment, skilling local talent, and expanding India’s high-tech workforce. Global collaborations have sharpened expertise, while increased R&D investment has accelerated innovation across the sector.

The Road Ahead: India’s Big Global Push

The 2024–25 Interim Union Budget has reinforced the government’s commitment to defence, with higher allocations for infrastructure and modernization. India has also granted 606 industrial licenses to 369 defence companies, making it easier for firms to ramp up production.

Looking ahead, India is setting its sights on USD 6.02 billion in defence exports by 2028–29, a target that could firmly establish the country as a global defence supplier. With increased government backing, growing international credibility, and a strong shift toward self-reliance, India’s A&D sector isn’t just catching up—it’s setting the pace for the future.