India’s defence sector is undergoing rapid transformation, fueled by strategic imperatives to modernise its armed forces and reduce dependency on foreign imports. The government has prioritised self-reliance through policies promoting domestic manufacturing, technology indigenisation, and enhanced private-sector participation. Geopolitical challenges, particularly along contested borders, continue to shape budget allocations, with a focus on upgrading military infrastructure and equipment. This dynamic landscape underscores India’s ambition to emerge as a global defence manufacturing hub while addressing evolving security threats
India's defence spending has grown significantly from US$70.2B in FY19 to US$93.9B in FY24, with projections indicating it will reach US$144.8B by FY29. The Indian Army commands the largest share of the defence budget at INR 2.81 trillion in FY24, representing the highest allocation among all three defence units.
Border tensions with neighbouring countries, particularly China and Pakistan, have necessitated increased defence allocations with a strategic focus on capital outlays for equipment upgrades and military infrastructure. For FY25, the Ministry of Defence secured US$75B, marking the highest allocation among all government ministries
Policy initiatives like ‘Aatmanirbhar Bharat’ and reforms such as increased FDI limits are accelerating domestic defence production. The government has earmarked significant funds for indigenous procurement, technology transfers, and large-scale projects to boost local manufacturing. Defence exports have surged, supported by industrial licenses and global partnerships. Modernisation efforts focus on integrating advanced technologies, improving logistics, and restructuring military commands. Strategic troop deployments along contentious borders and investments in integrated theatre commands underscore the sector’s evolving operational priorities.