India Defence Market Outlook to 2035

The report titled “India Defence Market Outlook to 2035 – By Platform, By Service Branch, By Procurement Category, By Indigenous vs Import Mix, and By End-User Segment” provides a comprehensive analysis of the defence industry in India. The report covers an overview and genesis of the market, overall market size in terms of value, detailed market segmentation; trends and developments, policy and procurement framework, buyer-level demand profiling, key issues and challenges, and competitive landscape including competition scenario, cross-comparison, opportunities and bottlenecks, and company profiling of major public and private players operating in the Indian defence ecosystem. The report concludes with future market projections based on force modernization priorities, indigenous manufacturing under Atmanirbhar Bharat, evolving threat perceptions, capital acquisition cycles, defence exports, regional security dynamics, cause-and-effect relationships, and case-based illustrations highlighting the major opportunities and cautions shaping the market through 2035.

India Defence Market Overview and Size

The India defence market is valued at approximately ~USD ~ billion, representing capital and revenue expenditure across land, naval, air, space, and emerging domains such as cyber and electronic warfare. The market encompasses platforms and systems including aircraft, helicopters, naval vessels, submarines, armored vehicles, artillery, missiles, radars, drones, communication systems, ammunition, spares, maintenance services, and modernization upgrades procured by the Indian Armed Forces under the oversight of the Ministry of Defence.

India maintains one of the world’s largest standing armed forces, driving sustained long-term defence spending to address territorial security, maritime interests, and regional power balance. Demand is anchored by the modernization of aging Soviet-era platforms, induction of next-generation systems, and a gradual shift from import-heavy procurement toward domestic design, development, and manufacturing. Defence spending is further supported by long equipment lifecycles, multi-year acquisition programs, and recurring requirements for spares, overhaul, and life-extension upgrades.

From a geographic and industrial standpoint, defence manufacturing and integration activity is concentrated across states such as Uttar Pradesh, Tamil Nadu, Maharashtra, Telangana, Karnataka, and Gujarat, supported by defence industrial corridors, public-sector undertakings, and a growing private supplier base. Northern and western regions remain demand-heavy due to land-border security requirements, while the Indian Ocean Region drives sustained naval and air force investments. The aerospace and missile segments represent high-value demand, while land systems and ammunition provide volume-driven stability.

What Factors are Leading to the Growth of the India Defence Market:

Force modernization and replacement of legacy platforms sustain long-term capital demand: India continues to replace aging fighter aircraft, helicopters, naval vessels, submarines, air defence systems, and armored platforms that are approaching end-of-life. These replacement cycles are not episodic but structural, extending over decades due to the scale of the armed forces and phased induction strategies. Programs spanning combat aircraft, naval surface combatants, artillery, and missile systems create a steady pipeline of large-ticket acquisitions, upgrades, and follow-on orders, ensuring visibility for suppliers across the value chain.

Policy-driven push for indigenization reshapes procurement and manufacturing dynamics: Government initiatives such as Make in India and Atmanirbhar Bharat have reoriented defence procurement toward domestic manufacturing, technology transfer, and local value addition. Positive indigenization lists, higher FDI limits in defence manufacturing, and preference for Indian-designed, developed, and manufactured (IDDM) categories have expanded opportunities for domestic primes and Tier-1 suppliers. Organizations such as Defence Research and Development Organisation play a central role in platform development, while private players increasingly participate in system integration, electronics, and advanced materials.

Rising role of private sector and MSME ecosystem improves execution capacity: The Indian defence ecosystem has evolved beyond a public-sector-dominated structure to include large private conglomerates and a broad MSME supplier base. Private shipyards, aerospace manufacturers, electronics firms, and precision engineering companies now contribute to platforms, subsystems, and lifecycle services. This diversification improves production scalability, reduces execution risk, and enables parallel program development across multiple domains, supporting faster induction timelines and export competitiveness.

Which Industry Challenges Have Impacted the Growth of the India Defence Market:

Lengthy procurement cycles and multi-layered approval processes delay program execution and capital absorption: Defence acquisitions in India are governed by structured procurement procedures involving multiple stages of approval, technical evaluations, trials, cost negotiations, and oversight by several committees. While these processes are designed to ensure transparency, compliance, and strategic alignment, they often result in extended timelines between requirement identification and contract finalization. Delays in decision-making can push program schedules by several years, affecting supplier cash flows, capacity planning, and the pace of force modernization. For capital-intensive platforms such as aircraft, submarines, and air defence systems, prolonged acquisition cycles also increase cost escalation risks and dependency on interim life-extension programs for legacy assets.

Technology transfer constraints and dependence on foreign OEMs limit indigenization depth: Although India has made progress in local assembly and licensed manufacturing, access to critical technologies—such as propulsion systems, advanced avionics, sensors, seekers, and materials—remains constrained by export controls, intellectual property restrictions, and strategic considerations of foreign suppliers. In several programs, indigenous manufacturing is limited to structural components and integration activities, while high-value subsystems continue to be imported. This limits domestic value addition, increases lifecycle costs, and exposes supply chains to geopolitical and regulatory risks, particularly during periods of heightened global tensions or sanctions regimes.

Capacity, quality, and scalability challenges within the domestic supplier ecosystem affect execution reliability: The rapid expansion of private-sector participation and MSME involvement has improved breadth but also introduced variability in execution capability. Many domestic suppliers face challenges related to consistent quality control, certification compliance, advanced manufacturing readiness, and scale-up for serial production. Defence platforms demand extremely tight tolerances, long-term reliability, and rigorous testing, and any weaknesses in supplier capability can lead to production delays, rework, or dependency on alternate sourcing. Bridging this gap requires sustained investment in skills, tooling, testing infrastructure, and program management maturity across the supply base.

What are the Regulations and Initiatives which have Governed the Market:

Defence Acquisition Procedure (DAP) and categorization framework shaping procurement priorities: India’s defence procurement is governed by the Defence Acquisition Procedure, which defines acquisition categories such as Buy (Indian–IDDM), Buy (Indian), Buy and Make (Indian), and Buy (Global). This framework prioritizes indigenous design and manufacturing while setting eligibility criteria related to local content, ownership, and technology control. The categorization process directly influences vendor selection, partnership structures, and program economics, often favoring domestic primes and joint ventures aligned with indigenization objectives.

Indigenization lists, offset policies, and FDI norms guiding domestic manufacturing participation: Positive indigenization lists issued by the government restrict the import of specified platforms, subsystems, and spares, mandating domestic sourcing over defined timelines. Offset policies linked to large foreign contracts require OEMs to reinvest a portion of contract value into India’s defence ecosystem through sourcing, technology collaboration, or capability development. In parallel, revised foreign direct investment norms allow higher foreign ownership under certain conditions, balancing capital inflows with strategic control considerations. Together, these initiatives shape investment decisions, partnership models, and localization strategies across the defence industry.

Export controls, compliance standards, and quality certifications governing market access: Defence manufacturing and exports are subject to stringent licensing, security clearances, and compliance with national and international regulations. Companies must adhere to quality assurance standards, testing protocols, and certification requirements imposed by defence quality agencies and end users. For exports, compliance with international arms control regimes, end-use monitoring, and diplomatic clearances adds additional layers of oversight. While these regulations are essential for national security and credibility, they also increase administrative complexity and lengthen market entry timelines for new players.

India Defence Market Segmentation

By Platform Type: Land systems continue to account for the largest share of defence spending in India. This is driven by India’s extensive land borders, ongoing requirements for troop mobility, armored protection, artillery modernization, and ammunition replenishment. Armored vehicles, artillery guns, air defence systems, and infantry equipment represent volume-driven demand with recurring upgrade and replacement cycles. While air and naval platforms command higher per-unit values, land systems benefit from scale, domestic manufacturing readiness, and steady procurement visibility. Air and naval platforms remain critical growth engines, particularly for modernization and strategic deterrence, but land systems retain dominance due to operational breadth and sustained force deployment requirements.

Land Systems (Armored Vehicles, Artillery, Air Defence, Small Arms & Ammunition)  ~45 %
Air Platforms (Fighter Aircraft, Transport Aircraft, Helicopters, UAVs)  ~30 %
Naval Platforms (Surface Combatants, Submarines, Patrol Vessels)  ~20 %
Space, Cyber & Emerging Domains  ~5 %

By Service Branch: Indian Army dominates overall defence demand. The Indian Army remains the largest end user due to manpower scale, continuous border deployments, and the breadth of equipment categories under its operational control. Army procurement spans vehicles, artillery, air defence, communications, and logistics systems, generating consistent demand across capital and revenue budgets. The Indian Air Force represents the highest-value per-program buyer due to aircraft, engines, avionics, and weapons systems, while the Indian Navy’s demand is characterized by long-cycle, capital-intensive shipbuilding and submarine programs with high indigenization potential.

Indian Army  ~55 %
Indian Air Force  ~25 %
Indian Navy  ~20 %

Competitive Landscape in India Defence Market

The India defence market exhibits moderate concentration, anchored by large public sector undertakings (PSUs) with legacy manufacturing capabilities, alongside an increasingly influential private-sector ecosystem. Market leadership is driven by platform integration capability, access to long-term programs, compliance with defence quality standards, execution reliability, and alignment with indigenization priorities. PSUs dominate legacy platforms and strategic assets, while private players are gaining share in aerospace, electronics, naval construction, and subsystems through partnerships, joint ventures, and export-led growth. Competition is further shaped by technology access, offset execution capability, and the ability to scale production for serial orders.

Some of the Recent Competitor Trends and Key Information About Competitors Include:

Hindustan Aeronautics Limited (HAL): HAL continues to anchor India’s aerospace manufacturing ecosystem, with dominance in combat aircraft, helicopters, and engine overhaul programs. Its competitive strength lies in long-term programs, lifecycle support capabilities, and deep integration with air force modernization plans. However, execution timelines and capacity ramp-up remain key areas of scrutiny as order volumes increase.

Bharat Electronics Limited (BEL): BEL has emerged as a critical supplier of radars, electronic warfare systems, communications, and command-and-control solutions. The company benefits from rising demand for network-centric warfare, air defence, and border surveillance systems, positioning it strongly in technology-intensive and upgrade-driven segments.

Larsen & Toubro – Defence: L&T has built a strong position in naval systems, missiles, artillery, and complex engineering platforms. Its competitiveness is driven by private-sector execution discipline, systems integration capability, and success in high-complexity programs where precision manufacturing and program management are critical.

Tata Advanced Systems Limited (TASL): TASL plays a central role in aerospace structures, UAVs, and system integration through global partnerships. Its positioning is reinforced by export-oriented programs, global OEM linkages, and growing participation in aircraft, helicopter, and advanced systems manufacturing.

Adani Defence & Aerospace: Adani Defence has rapidly expanded across ammunition, UAVs, electronics, and aerospace manufacturing. The company’s strategy emphasizes capacity creation, technology partnerships, and alignment with indigenization policies, positioning it as a fast-scaling challenger in both domestic and export markets.

What Lies Ahead for India Defence Market?

The India defence market is expected to expand steadily through 2035, supported by long-term force modernization programs, sustained capital allocation, and a structural shift toward indigenous manufacturing and capability development. Growth momentum is reinforced by evolving regional security dynamics, increasing emphasis on self-reliance, expansion of domestic defence production capacity, and the gradual maturation of private-sector participation. As India balances preparedness across land, air, naval, space, and emerging domains, defence spending will continue to reflect a mix of platform replacement, capability upgrades, and technology-led investments rather than episodic procurement cycles.

Transition Toward Indigenous Platforms and Deeper Local Value Addition: The outlook period will see a continued transition from import-heavy acquisitions toward indigenous platforms and systems with higher domestic value addition. Programs across combat aircraft, helicopters, naval vessels, artillery, missiles, and electronic systems increasingly emphasize local design, manufacturing, and lifecycle support. While foreign collaboration will remain relevant for critical technologies, future growth will favor suppliers that can demonstrate scalable domestic production, system integration capability, and long-term sustainment support. This shift will gradually improve supply chain resilience and reduce external dependency risks over the medium to long term.

Growing Emphasis on Multi-Domain Capability and Technology-Centric Warfare: India’s defence priorities are expanding beyond conventional platform strength toward multi-domain readiness, including cyber, space, electronic warfare, unmanned systems, and network-centric operations. Investments in sensors, secure communications, command-and-control systems, and data-driven decision support are expected to rise as a share of total defence expenditure. Through 2035, these domains will increasingly influence procurement decisions, favoring firms with strengths in electronics, software, AI-enabled systems, and system-of-systems integration alongside traditional platform manufacturers.

Increasing Role of the Private Sector and Program-Based Partnerships: Large private-sector players are expected to play a more central role in platform development, serial production, and export-oriented manufacturing. Program-based partnerships, joint ventures, and long-term production contracts will become more common as the government seeks execution efficiency and capacity expansion beyond public-sector units. This evolution will strengthen competition, improve delivery timelines, and create a more balanced ecosystem where PSUs and private players coexist across different capability layers.

Expansion of Defence Exports and Integration into Global Supply Chains: Defence exports are expected to become a more meaningful contributor to overall industry growth by 2035. India’s cost competitiveness, improving quality standards, and diplomatic engagement with emerging markets support export growth across ammunition, patrol vessels, radars, UAVs, aerospace components, and subsystems. Integration into global OEM supply chains will further support capacity utilization, technology absorption, and revenue diversification for domestic manufacturers.

India Defence Market Segmentation

By Platform Type

• Land Systems (Armored Vehicles, Artillery, Air Defence, Small Arms & Ammunition)
• Air Platforms (Fighter Aircraft, Transport Aircraft, Helicopters, UAVs)
• Naval Platforms (Surface Combatants, Submarines, Patrol Vessels)
• Space, Cyber & Emerging Domains

By Service Branch

• Indian Army
• Indian Air Force
• Indian Navy

By Procurement Category

• Buy (Indian–IDDM)
• Buy (Indian)
• Buy and Make (Indian)
• Buy (Global)

By Manufacturing Orientation

• Indigenous Design & Manufacturing
• Licensed Manufacturing / Technology Transfer
• Direct Imports

By End-User Segment

• Combat Forces
• Training & Support Units
• Strategic & Deterrence Forces

Players Mentioned in the Report:

• Hindustan Aeronautics Limited (HAL)
• Bharat Electronics Limited (BEL)
• Bharat Dynamics Limited (BDL)
• Mazagon Dock Shipbuilders Limited
• Garden Reach Shipbuilders & Engineers
• Larsen & Toubro – Defence
• Tata Advanced Systems Limited
• Adani Defence & Aerospace
• Bharat Forge – Defence
• Emerging private defence MSMEs and subsystem suppliers

Key Target Audience

• Defence platform manufacturers and system integrators
• Defence electronics, radar, and communication system suppliers
• Aerospace and naval shipbuilding companies
• Ammunition, missile, and weapon system manufacturers
• Defence MSMEs and Tier-1 / Tier-2 suppliers
• Foreign OEMs and joint venture partners
• Policy makers and defence procurement bodies
• Strategic investors and defence-focused funds

Time Period:

Historical Period: 2019–2024
Base Year: 2025
Forecast Period: 2025–2035