Advantage India
Growing
Demand
*Demand growth is likely to accelerate with rising concerns of national security.
*Till March 2026, the number of defence industrial licences had increased to 834, supporting a robust indigenous defence manufacturing ecosystem comprising around 500 licensed defence companies, 16 Defence Public Sector Undertakings (DPSUs) and nearly 17,000 MSMEs.
*India’s defence exports have witnessed a remarkable surge, growing from Rs. 23,622 crore (US$ 2.8 billion) in FY25 to Rs. 38,424 crore (US$ 4.35 billion) in FY26, marking a 62.66% increase.
*Defence production stood at Rs. 1,77,995 crore (US$ 20.14 billion) in FY26, indicating continued strong momentum in the sector.
Competitive
Advantage
*On 05 February 2026, India strengthened its position as a reliable Defence supplier by leveraging strategic partnerships and technology transfers, improving product quality and expanding its footprint in Asia, Africa, and the Middle East.
*In February 2025, India has secured a Rs. 3,800 crore (US$ 440.3 million) deal to export BrahMos missiles to Indonesia, showcasing its advanced defense manufacturing capabilities, including the domestic production of aircraft carriers.
*India plans to deploy 52 satellites by CY30 to boost space-based surveillance for the Army, Navy, and Air Force, enabling enemy tracking, border monitoring, and real-time coordination.
Government
Support
*The Union Budget for FY27 envisaged an outlay of Rs. 7,84,678 crore (US$ 88.7 billion). The allocation towards the Defence Ministry is the highest across all ministries and accounts for 14.7% of the total expenditure of the central government.
*As of May 2026, five Positive Indigenisation Lists covering 5,012 DPSU items have been notified, while the SRIJAN portal has facilitated the indigenisation of more than 15,700 defence items, including 3,204 PIL items.
*On 14 January 2026, the Ministry of Defence approved new projects under the iDEX (Innovations for Defence Excellence) scheme to support startups and MSMEs working on AI, drones, and advanced defence technologies.
Opportunities
*As of February 2026, approximately 676 start-ups, MSMEs, and individual innovators have joined the defence innovation ecosystem since the inception of iDEX in 2018.
*Goldman Sachs expects India’s private defence firms to deliver 32% annual EPS growth between FY25 and FY28, driven by rising exports and indigenisation. The domestic market is projected to expand to Rs. 10,00,000 crore (US$ 122 billion) over the next 20 years.
Bharat Earth Movers Limited (BEML)
Established in 1964, BEML stated as a manufacturer of rail coaches & spare parts and mining equipment in Bengaluru. The company has partially disinvested and at present, the Government of India owns 54% of the total equity and 46% is held by Public, financial institutions, foreign institutional investors, banks and employees. BEML’s products are exported to >67 countries.
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Bharat Electronics (BEL): Driving Innovation in Defence Electronics
Established in 1954, BEL engages in manufacturing of specialised electronic equipment requirements of the Indian Defence Services. BEL produces a wide range of equipment for areas such as defence communication, radars, naval systems, c4i systems, weapon systems, homeland security, telecom & broadcast systems, electronic warfare, tank electronics, electro-optics, professional electronic components and solar photovoltaic systems.
Read MoreHindustan Aeronautics Limited (HAL)
Established in 1940, Hindustan Aircraft Limited (HAL) operates as an aerospace and defence company. The company uses international design, under licence, to build and assemble aircraft and engines such as Prentice, Vampire and Gnat. It also designs and develops domestic aircraft. The company, in collaboration with the Inter-Continental Aircraft Company of USA, commenced its business of manufacturing Harlow Trainer, Curtiss Hawk Fighter and Vultee Bomber Aircraft.
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