India's defence sector has experienced unprecedented growth over the past decade, with production rising from ₹50,000 crore in FY15 to a record ₹1.54 lakh crore in FY25, according to a Rubix Data Sciences report. The government has now set an ambitious target of ₹3 lakh crore by FY29, while the defence budget has tripled since FY14, reaching as high as ₹7.85 lakh crore in FY27. This marked the largest allocation of any Union Ministry, accounting for 14.67% of the Union Budget. In FY25, the Ministry of Defence signed 193 contracts worth ₹2.09 lakh crore, with 92% by volume and 81% by value directed at Indian firms. As per Rubix, a key reason behind this sharp growth is the increasing preference for domestic manufacturers in procurement decisions.
Defence exports have achieved remarkable growth, hitting an all-time high of ₹38.4 crore in FY26 after rising more than 63% over the previous year and a 25-fold increase since FY17. The government has now set an export target of ₹50 crore by FY29. India now supplies to over 80 countries, with products ranging from BrahMos missiles and Akash air-defence systems to naval vessels, Swathi radars and artillery. In FY26, India cleared 55 procurement proposals worth a record $71 billion, the highest in a single financial year. According to Rubix, procurement is increasingly anchored within the country, with private players, MSMEs and start-ups now participating alongside established public sector enterprises.
A key driver behind this growth is the increasing preference for domestic manufacturers, with around 65% of India's defence equipment now produced domestically, representing a reversal of the 65–70% import dependence that defined the sector a decade ago. According to Rubix, this shift is changing the risk and supply chain landscape, with more value chain moving onshore and deeper supplier networks emerging. As Mohan Ramaswamy, Co-founder and CEO of Rubix Data Sciences, noted, "Procurement is increasingly anchored within the country, and the industrial base is widening, with private players, MSMEs and start-ups now participating alongside established public sector enterprises. This shift is also changing the risk and supply chain landscape. As more of the value chain moves onshore, dependencies become more visible, supplier networks deepen, and the need for better risk assessment across tiers increases."
India remains the world's second-largest arms importer but is actively diversifying its supplier base. Russia's share has declined sharply from 70% (2011–2015) to 40% (2021–2025), while France has emerged as the second-largest supplier at 29%, followed by Israel at 15%. According to Rubix, addressing structural challenges will require accelerated investment in research and development, deeper industry–academia collaboration and continued policy support to strengthen domestic capability in high-end technologies. Despite the optimism, the report flagged structural challenges, including continued import dependence for critical technologies such as jet engines and advanced sensors, a persistent gap in R&D intensity and exposure to global supply chain disruptions.
Sustained policy support through DAP 2020, the draft DAP 2026, Defence Industrial Corridors, the PLI scheme for drones, the Positive Indigenisation List (PIL) and the iDEX programme is steadily accelerating indigenisation. As reported by Rubix, India's defence sector is positioned for robust long-term expansion, with a more resilient and self-reliant ecosystem taking shape. The report emphasizes that while reliance on critical imports continues to shape key decisions, the emphasis is moving towards building capacity within India, where stronger supply chain resilience directly supports greater self-reliance and national security. According to Ramaswamy, "Nevertheless, sustained policy support is steadily accelerating indigenisation, and India's defence sector is positioned for robust long-term expansion, with a more resilient and self-reliant ecosystem taking shape."
