16,000 MSMEs Emerge as Key Force in Strengthening India’s Defence Manufacturing
New Delhi, Nov 20 — India’s defence manufacturing ecosystem is experiencing an unprecedented transformation, driven largely by the rising contribution of Micro, Small and Medium Enterprises (MSMEs). According to an official government statement released on Thursday, nearly 16,000 MSMEs are now actively supporting indigenous defence capabilities, marking a major boost to India’s self-reliance push.
From drones and avionics to advanced electronics, companies across the spectrum — both large and small — are expanding their footprint in defence production. The government’s latest assessment suggests that India is on track to consolidate its position as a global defence manufacturing hub in the coming years.
India’s Defence Production at Record Highs
India recorded its highest-ever defence production of ₹1.54 lakh crore in FY25, with the government projecting that the figure will reach ₹1.75 lakh crore by the end of the current fiscal year. This sharp rise is attributed to growing domestic manufacturing, policy reforms, and increased participation of private players.
The country has set an ambitious target of ₹3 lakh crore in defence production by 2029, a milestone officials believe is achievable due to expanding industrial capacity and consistent demand from the armed forces.
In a major shift, India’s indigenous defence output has increased 174% from FY15 levels. In 2014–15, domestic production stood at ₹46,429 crore — a figure that has since grown significantly under the government’s Atmanirbhar Bharat and Make in India programmes.
Context: Stable Investments and Growing Industrial Participation
The defence sector’s rapid expansion is backed by a substantial rise in budgetary allocations. India’s defence budget has increased from ₹2.53 lakh crore in 2013–14 to ₹6.81 lakh crore in 2025–26, reflecting the government’s long-term focus on strengthening national security and military infrastructure.
Industrial participation is also expanding. The government has issued 788 industrial licences to 462 companies, allowing them to manufacture weapons, ammunition, platforms, and advanced systems. This marks a significant increase in industrial engagement compared to previous years.
Public Sector Undertakings (PSUs) account for roughly 77% of India’s defence production, while the private sector’s share has risen to 23% in FY25, up by two percentage points year-on-year. Officials say this trend aligns with the objective of diversifying defence manufacturing and encouraging greater private innovation.
Details: Exports, Corridors, and Policy Push
India currently exports defence equipment to more than 100 countries, with exports registering a 12% growth in FY25 — rising by ₹2,539 crore compared to FY24. These exports include helicopters, radars, armoured vehicles, explosives, surveillance systems, and avionics.
The development of two Defence Industrial Corridors — one in Uttar Pradesh and another in Tamil Nadu — has emerged as a key driver of infrastructure-led growth. As of October 2025, the corridors have attracted ₹9,145 crore in investments, with 289 Memorandums of Understanding (MoUs) signed and ₹66,423 crore in potential industrial opportunities being explored.
Policy reforms have also been a major enabler. Key measures include:
- Streamlined Defence Acquisition Procedures (DAP)
- Positive indigenisation lists mandating procurement from domestic manufacturers
- Liberalised FDI policies
- A ₹1 lakh crore RDI (Research, Development & Innovation) scheme
- Export promotion programmes targeting ₹50,000 crore in defence exports by 2029
Together, these reforms aim to strengthen India’s supply chain, reduce import dependency, and create long-term stability for defence manufacturers.
Reactions: Government’s Push for Self-Reliance Draws Industry Support
Industry stakeholders have welcomed the government’s growing emphasis on indigenous capability. Officials have noted that MSMEs, startups, and private firms are crucial for innovation, rapid prototyping, and cost-effective production — areas where smaller firms often outperform traditional large manufacturers.
A senior defence official said the rise of MSMEs shows how the domestic ecosystem is maturing:
“From drones to avionics to cutting-edge electronics, companies both big and small are stepping up, while 16,000 MSMEs are emerging as the game-changers.”
Industry experts say the positive momentum reflects a structural shift in India’s manufacturing landscape. They point to increasing demand from the armed forces, diversification of production lines, and export opportunities that were previously dominated by foreign suppliers.
Analysis: Why MSMEs Matter in India’s Defence Future
The growing involvement of MSMEs marks a strategic advantage for India. Smaller firms offer agility, specialised capabilities, and low-cost solutions — critical factors in modern warfare dominated by rapidly evolving technologies such as drones, AI-enabled systems, electronic warfare tools, and autonomous platforms.
Analysts highlight three major reasons MSMEs are shaping India’s defence rise:
1. Rapid Innovation:
MSMEs and startups are driving advancements in unmanned systems, robotics, software-defined radios, and lightweight composite materials.
2. Supply Chain Expansion:
They strengthen domestic supply chains, ensuring India is less dependent on critical imports.
3. Export Competitiveness:
High-quality yet cost-efficient products from Indian MSMEs are gaining visibility in markets across Asia, Africa, and Latin America.
With global defence spending rising amid geopolitical instability, India’s ability to scale domestic production could play a decisive role in shaping its future defence partnerships.
Conclusion
India’s defence manufacturing sector is undergoing a major transformation as MSMEs take centre stage in the country’s pursuit of self-reliance. Record production numbers, rising exports, expanding industrial corridors, and policy reforms have collectively created one of the fastest-growing defence ecosystems in the world.
With ambitious targets for 2029 and beyond, the government’s strategy relies heavily on nurturing innovation-driven MSMEs — a sector that is quickly redefining India’s technological and industrial capabilities.
Final Thoughts from TheTrendingPeople.com
India’s defence manufacturing growth reflects not just policy ambition but a cultural shift toward innovation and self-reliance. As MSMEs continue to power the nation’s defence ecosystem, the coming years could see India emerge as a major global force in cutting-edge defence technology and exports.