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Current AffairsInternal Security

India’s defence production hits record ₹1.78 lakh crore in FY 2025-26

Wednesday, 17 June 20267 min read1,385 words22

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In this article

ContextBackground & Historical EvolutionKey Points & FactsMulti-Dimensional AnalysisWay Forward

Context

On June 17, 2026, the Defence Ministry announced that India's annual defence production reached an all-time high of ₹1.78 lakh crore in Financial Year (FY) 2025-26. This represents a 15.6% growth over the previous fiscal year's output of ₹1.54 lakh crore and a 110% increase since FY 2020-21 when production was ₹84,643 crore. The indigenous defence production has increased almost four times from ₹43,746 crore in FY 2013-14. Defence Public Sector Undertakings (DPSUs) and other PSUs accounted for approximately 76% of total production, while the private sector contributed 24% (around ₹42,000 crore), up from 22% in FY 2024-25. Defence exports also hit a record ₹38,424 crore in FY 2025-26. Defence Minister Rajnath Singh credited Prime Minister Narendra Modi's leadership and the collective efforts of the Department of Defence Production and public & private sectors for achieving this landmark.

Background & Historical Evolution

India's defence production journey has evolved significantly since independence. Initially, the sector was dominated by Ordnance Factories and DPSUs established under the Ministry of Defence. The first major reform came with the establishment of the Defence Research and Development Organisation (DRDO) in 1958 to foster indigenous research. However, for decades, India remained heavily dependent on imports, with the Soviet Union and later Russia being key suppliers. The Kargil War (1999) exposed critical gaps in indigenous capabilities, prompting a push for self-reliance. The Defence Procurement Procedure (DPP) was revised in 2002, 2006, and 2013 to encourage indigenous manufacturing. A major shift occurred in 2014 with the launch of the 'Make in India' initiative, followed by the 'Aatmanirbhar Bharat' (Self-Reliant India) campaign in 2020. Key milestones include the corporatisation of Ordnance Factory Board (OFB) into seven new DPSUs in 2021, the notification of positive indigenisation lists (over 5,000 items) by the Ministry of Defence, and the increase in Foreign Direct Investment (FDI) limit in defence sector from 49% to 74% in 2020. The Defence Production and Export Promotion Policy (DPEPP) 2020 set a target of ₹1.75 lakh crore in defence production by 2025, which has been achieved ahead of schedule. The record production of ₹1.78 lakh crore in FY 2025-26 marks a four-fold increase from ₹43,746 crore in FY 2013-14, reflecting sustained policy momentum.

Key Points & Facts

  • India's annual defence production reached an all-time high of ₹1.78 lakh crore in FY 2025-26.
  • This represents a 15.6% growth over the previous fiscal year's output of ₹1.54 lakh crore.
  • Defence production has increased by 110% since FY 2020-21 when it was ₹84,643 crore.
  • Indigenous defence production has increased almost four times from ₹43,746 crore in FY 2013-14.
  • Defence Public Sector Undertakings (DPSUs) and other PSUs accounted for approximately 76% of total production.
  • The private sector contributed 24% (around ₹42,000 crore) in FY 2025-26, up from 22% in FY 2024-25.
  • Defence exports hit a record ₹38,424 crore in FY 2025-26.
  • Defence Minister Rajnath Singh credited Prime Minister Narendra Modi's leadership and the collective efforts of the Department of Defence Production and public & private sectors.
  • The growth is attributed to the government's push for self-reliance under the Aatmanirbhar Bharat initiative.
  • The milestone reflects an expanding defence industrial base with sustained policy support and increased private sector participation.

Multi-Dimensional Analysis

Political & Constitutional Dimensions: The government, led by Prime Minister Narendra Modi, has positioned the record defence production as a key achievement of the Aatmanirbhar Bharat initiative. Defence Minister Rajnath Singh credited the inspiring leadership of Mr. Modi for taking India's defence production to newer heights. The opposition, while acknowledging the growth, may critique the continued dominance of PSUs (76% share) and question whether the private sector's 24% share is sufficient for true self-reliance. Constitutional provisions under Article 246 (Union List, Entry 1: Defence of India) give the central government exclusive jurisdiction over defence production. The achievement reinforces the central government's narrative of economic nationalism and strategic autonomy.

Economic & Financial Impact: The record defence production of ₹1.78 lakh crore has significant fiscal implications. It reduces India's dependence on imports, saving foreign exchange and improving the trade balance. The growth from ₹84,643 crore in FY 2020-21 to ₹1.78 lakh crore in FY 2025-26 (110% increase) indicates a compound annual growth rate (CAGR) of approximately 16%. The private sector's contribution of around ₹42,000 crore (24%) shows increasing industrial participation. Defence exports of ₹38,424 crore further contribute to foreign exchange earnings. Critics may argue that the defence budget's capital outlay for modernisation remains constrained, and the production figures may include items with high import content, limiting the true value addition. The government counters that the positive indigenisation lists and FDI reforms are gradually reducing import dependence.

Social Dimensions: The growth in defence production has employment implications, particularly in regions with DPSUs and private defence manufacturing hubs. The expansion of the private sector (24% share) creates skilled jobs in engineering, manufacturing, and R&D. However, concerns remain about regional imbalances, as most defence manufacturing is concentrated in states like Maharashtra, Tamil Nadu, Karnataka, and Uttar Pradesh. The corporatisation of OFB in 2021 led to restructuring, which initially caused job anxieties among workers. The government's focus on MSMEs and startups under the iDEX (Innovations for Defence Excellence) scheme aims to broaden the industrial base. Equity considerations arise regarding the participation of smaller firms and whether the benefits of defence production growth reach all sections of society.

Governance & Administrative Aspects: The achievement reflects improved coordination between the Ministry of Defence, DPSUs, and private sector. The Department of Defence Production has implemented several reforms, including simplified licensing procedures, the introduction of the Defence Acquisition Procedure (DAP) 2020, and the establishment of defence corridors in Uttar Pradesh and Tamil Nadu. Implementation challenges include ensuring quality standards, timely delivery, and technology transfer. The dominance of PSUs (76%) raises questions about efficiency and competition. Federalism implications arise as states compete for defence investments, with the central government's policies influencing regional industrial development. The government's push for 'Make in India' requires robust monitoring mechanisms to prevent cost overruns and delays.

International Perspective: India's defence production growth aligns with global trends of increasing indigenous capabilities among major powers. Countries like China, South Korea, and Turkey have successfully built domestic defence industries through state-led initiatives. India's defence exports of ₹38,424 crore (approximately $4.6 billion) are still modest compared to global leaders like the US ($150+ billion), Russia ($15+ billion), or France ($10+ billion). However, the growth trajectory is positive. India's strategic partnerships with countries like France (Rafale deal), Russia (S-400), and the US (defence technology cooperation) involve technology transfer clauses that support indigenisation. The government's policy of allowing 74% FDI in defence sector aims to attract foreign investment and technology. Critics argue that India's defence exports are still dominated by low-value items and that achieving true self-reliance requires developing critical technologies like aero-engines and semiconductors.

Way Forward

Short-term Measures:

  • Accelerate the implementation of the positive indigenisation lists, which have already identified over 5,000 items for import substitution.
  • Strengthen the iDEX (Innovations for Defence Excellence) scheme to support more defence startups and MSMEs, aiming to increase their share in the defence supply chain.
  • Streamline the Defence Acquisition Procedure (DAP) to reduce procurement timelines and encourage private sector participation.

Medium-term Reforms:

  • Increase the private sector's share in defence production from the current 24% to at least 40% by FY 2030, as recommended by various expert committees.
  • Establish dedicated defence industrial corridors in Uttar Pradesh and Tamil Nadu with plug-and-play infrastructure to attract investment.
  • Enhance R&D spending in DRDO and encourage public-private partnerships for critical technologies like aero-engines, radars, and cybersecurity.

Long-term Vision:

  • Achieve the target of ₹3 lakh crore in defence production by FY 2030-31, as envisioned in the Defence Production and Export Promotion Policy (DPEPP) 2020.
  • Develop India as a global defence export hub, targeting exports of $10 billion by 2030, following the model of countries like Israel and South Korea.
  • Foster indigenous development of next-generation technologies such as artificial intelligence, hypersonic weapons, and directed energy systems through collaborative research with academia and industry.

International Best Practices:

  • Follow the South Korean model of 'defence offset' policies that mandate technology transfer and joint ventures.
  • Adopt the Israeli approach of nurturing a vibrant defence startup ecosystem through government-funded incubators.
  • Learn from the US model of public-private partnerships where private companies like Lockheed Martin and Boeing drive innovation while the government provides long-term contracts.

What can be asked in exam?

  • •Prelims angle: India's annual defence production reached an all-time high of ₹1.78 lakh crore in FY 2025-26.
  • •Prelims angle: This represents a 15.6% growth over the previous fiscal year's output of ₹1.54 lakh crore.
  • •Prelims angle: Defence production increased by 110% since FY 2020-21 when it was ₹84,643 crore.
  • •Mains angle: Discuss the significance of India's record defence production of ₹1.78 lakh crore in FY 2025-26 in the context of Aatmanirbhar Bharat. How does this achievement impact India's strategic autonomy and defence preparedness? (GS Paper 3, 250 words)
  • •Mains angle: Analyze the role of the private sector in India's defence manufacturing ecosystem. With reference to the private sector's 24% share in defence production, suggest measures to enhance its participation. (GS Paper 3, 250 words)

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Science · 2022

Direction / Passage

Genetic engineering, a revolutionary branch of biotechnology, continues to evolve rapidly, transforming the way we approach medicine, agriculture and various scientific endeavours. Recent developments in this field highlight both the immense potential and ethical considerations that come with the power to manipulate DNA. In the medical realm, gene editing technologies like CRISPR-Cas9 have gained prominence. These tools offer unprecedented precision in modifying genes, holding promise for treating genetic disorders. In a groundbreaking clinical trial, researchers successfully used gene editing to treat sickle cell anaemia. The patient’s own modified cells were reintroduced into their body, resulting in reduced symptoms and an improved quality of life. In agriculture, genetic engineering is driving advancements in crop production and food security. The development of Genetically Modified (GM) crops has enabled plants to resist pests, withstand harsh climates and improve nutritional content. For instance, GM rice has been biofortified to contain higher levels of essential vitamins, potentially combating malnutrition in regions where rice is a staple food. However, these advancements also raise ethical concerns. The potential for creating “designer babies” through gene editing has sparked debates about the boundaries of genetic manipulation. The question of whether it’s ethical to alter human DNA to enhance physical or cognitive traits continues to challenge bioethicists, policymakers and society at large. Data indicates the exponential growth of genetic engineering research. In the past decade, the number of scientific publications related to CRISPR technology has multiplied significantly. In 2010, there were approximately 150 CRISPR-related publications; by 2020, that number had soared to over 9,000. This surge demonstrates the profound impact of genetic engineering on the scientific community. As we navigate this brave new world of genetic engineering, striking a balance between innovation and ethical considerations remains paramount. The potential to cure genetic diseases, enhance food security and make leaps in scientific understanding is immense. However, careful consideration and collaboration are necessary to ensure that the benefits are realized while addressing the ethical complexities that accompany these technological breakthroughs.

Which gene editing technology has gained prominence recently?

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