Defence Manufacturing Industry in India

Recent development/Investments

The Indian Defence Manufacturing sector has seen some major investments and developments in the recent past.

• Aero India 2025, held from February 10-14, 2025, at Yelahanka Air Force Station in Bengaluru, featured India’s commitment to indigenous defence manufacturing, with events like the Defence Ministers’ Conclave, CEOs’ Round-Table, and iDEX start-up showcase.
• Defence Exhibition Organisation (DEO) under the Ministry of Defence anchors India’s two mega events, DefExpo and Aero India, providing institutional support and international outreach for defence trade fairs and delegations.
• India and the Philippines elevated their bilateral relations to a strategic partnership on August 5, 2025, focusing on defence cooperation, including the Philippines' acquisition of the BrahMos missile system from India.
• India’s GST 2.0 is set to modernise defence procurement, slashing GST on commercial drones to 5% and fully abolishing it on military drones and critical defence equipment like aircraft, missiles, simulators, batteries, underwater systems and software‐defined radios, boosting military readiness, cost efficiency and indigenisation in defence supply chains.
• Bharat Electronics Limited (BEL) and Israel Aerospace Industries (IAI), Israel's leading aerospace and defence company, have announced the establishment of a joint venture company (JVC). The JVC has been set up to provide life cycle support, both technical and maintenance related, for MRSAM air-defence systems of the country.
• Rolls-Royce intends to significantly increase its supply chain sourcing from India over the next five years, with a particular emphasis on complex aerospace and defense components.
• TechEagle plans to invest Rs. 100 crore (US$ 11.6 million) over the next three years from 2025 to address the growing demand for drones in public safety. The company has recently introduced an autonomous UAV specifically designed for disaster relief and law enforcement, highlighting its advanced domestic engineering capabilities, and has secured a contract with the Himachal government.
• JSW Defence is set to invest Rs. 800 crore (US$ 92.4 million) in Telangana for drone manufacturing. The company has signed a Memorandum of Understanding (MoU) with the Telangana State government to facilitate this initiative.
• Paras Defence & Space Technologies plans to invest Rs. 12,000 crore (US$ 1.39 billion) to establish India’s first Optics Park in Maharashtra, with the project expected to roll out in phases from 2028 to 2035 to ensure scalability and flexibility.
• The TATA Aircraft Complex at TATA Advanced Systems Limited (TASL) in Vadodara, Gujarat, inaugurated on October 28, 2024, marks a key step towards India's defense self-reliance. This facility is India's first private sector Final Assembly Line for military aircraft, dedicated to the production of 56 C-295 military transport aircraft, with the first 16 sourced from Airbus in Spain and the remaining 40 manufactured domestically.
• A Green Propulsion System developed under the Technology Development Fund (TDF) scheme of DRDO, showcased successful in-orbit functionality on a payload launched during the PSLV C-58 mission. The project, led by Bengaluru-based start-up Bellatrix Aerospace Pvt Ltd, surpassed all performance parameters as per Telemetry data from the PSLV Orbital Experimental Module (POEM) at ISRO's Telemetry, Tracking, and Command Network (ISTRAC). This eco-friendly propulsion system, comprising indigenously developed components, offers a non-toxic solution ideal for low orbit space missions with high thrust requirements. The project, overseen by DRDO's Project Monitoring & Mentoring Group, highlights the success of the TDF initiative in fostering innovation within India's defence and aerospace sectors, particularly among start-ups and MSMEs.
• In a major boost to Aatmanirbharta in defence & minimise imports by Defence Public Sector Undertakings (DPSUs), Department of Defence Production (DDP), Ministry of Defence has notified the fifth Positive Indigenisation List (PIL) consisting of 346 items. These include strategically important Line Replacement Units/Systems/ Sub-systems/Assemblies/Sub-assemblies/Spares & Components a raw material, with import substitution value worth Rs. 1,048 crore (US$ 126.57 million).
• In July 2024, The Defence Research & Development Organisation (DRDO) has awarded seven new projects to industries under its Technology Development Fund scheme. This initiative aims to support the Armed Forces and the aerospace and defense sectors. It highlights DRDO's commitment to fostering industries, particularly MSMEs and start-ups, in these fields. Developing these technologies locally will enhance the military industrial ecosystem.
• In January 2024, Bharat Electronics Ltd (BEL) partnered with the Foundation for Innovation and Technology Transfer (FITT) at IIT Delhi to translate breakthroughs in Naval Deep Tech research into products for the Indian Navy.
• Indian and American startups will now be able to co-develop and co-produce advanced technologies, including in areas of space artificial intelligence, under the India-United States Defence Acceleration Ecosystem (INDUS-X).
• The second Consultative Meeting on Defence Cooperation between India and Jordan was held today in New Delhi. The two countries discussed a range of issues including military training and courses, cyber security, military exercises, military medicine, and capacity building in various areas to enhance defence engagements. Both sides also exchanged their respective capabilities in the defence industry and research & development for forging collaborations in mutually beneficial areas.
• The Union Cabinet has accorded approval to sign a contract with Larsen & Toubro Limited (L&T) for the acquisition of three Cadet Training Ships, at an overall cost of US$ 379.5 million (Rs. 3,108.09 crore), under Buy {Indian-IDDM (Indigenously Designed, Developed and Manufactured)} category. The delivery of ships is scheduled to commence in 2026.
• In April 2024, Strategic Forces Command (SFC), along with Defence Research and Development Organisation (DRDO), conducted the successful flight-test of New Generation Ballistic Missile Agni-Prime from Dr APJ Abdul Kalam Island off the coast of Odisha.
• The Startup Incubation and Innovation Centre, IIT-Kanpur (SIIC IIT-Kanpur) recently signed an MoU with the Defence Innovation Organisation (DIO) to nurture and support startups and SMEs in the defence sector through its flagship programme iDEX Prime.
• HAL has built and delivered more than 150 military Do-228 and to a variety of customers. HAL has also constructed two civilian Do-228 aircrafts.