While the past year was one of reforms, witnessing India strengthening its defence capabilities following various measures being undertaken and giving boost to Aatmanirbharta, the coming year will be all about execution.
As 2025 drew to a close, these reforms have translated into a windfall of new orders, both for public and private sector’s defence manufacturers. By October, the ministry said it had utilised Rs 92,211.44 crore or 51.23% of the FY26 total capital outlay of Rs 1.80 lakh crore. In comparison, it had spent Rs 1.59 lakh crore in the last financial year. Since FY21, the ministry has steadily strengthened the domestic industry by earmarking a growing share of procurement for Indian manufacturers — Rs 1.11 lakh in FY26 alone. The impact of this push is evident in recent contract wins.
The past year also witnessed accelerating acquisition and manufacturer of defence equipment specially in the light of Operation Sindoor.
In September, Hindustan Aeronautics Ltd (HAL) signed a Rs 62,370 crore contract to supply 97 Light Combat Aircraft (LCA) Mk-1A to the Indian Air Force. Bharat Electronics Ltd announced that it had received new orders worth Rs 14,750 crore in the current financial year up to October-end. Bharat Dynamics Ltd secured orders worth over Rs 4,000 crore from the Indian Army over the past two months.
In November, the Indian Army signed a contract with Larsen & Toubro to procure BvS10 Sindhu vehicles at an undisclosed value, developed in partnership with BAE Systems. These have driven order book numbers of the public sector giants to record levels.
For instance, HAL’s orderbook, one of the largest in India’s defence space, climbed to an all-time high of Rs 2.3 lakh crore, up from Rs 1.9 lakh crore in June. Alongside HAL, Bharat Electronics and Bharat Dynamics remained dominant players in the defence manufacturing sector in India.
While the past year was one of reforms, witnessing India strengthening its defence capabilities following various measures being undertaken and giving boost to Aatmanirbharta, the coming year will be all about execution
Private sector participation, while still smaller in comparison, is also expanding. According to Crisil, the combined order book of private defence companies is expected to rise to about Rs 55,000 crore by the end of FY26, from Rs 40,000 crore in FY25. Larsen & Toubro, Solar Industries and Bharat Forge lead the listed players, with unlisted firms like Tata Advanced Systems and Adani Defence and Aerospace.
While PSUs continue to dominate high-value platform contracts, competition from private players is increasingly viewed as a long-term structural shift. The easing of entry barriers, greater use of consortium models and technology partnerships are expected to intensify this competition in the future.
Executives at Mazagon Dock Shipbuilders, for instance, have aimed for a Rs 1 lakh crore+ order book by the end of FY27 from the current modest order book of Rs 27,000 crore.
The global defence sector is at an inflection point, noted Madhumita Mahapatra, Partner and Aerospace and Defence Sector Lead, Deloitte India. “Technology modernisation, industrial resilience and shifting geopolitics are reshaping national priorities. Nations are moving beyond incremental upgrades toward secure digital architectures, intelligent platforms, decision support systems and diversified supply chains that can withstand strategic shocks and disruptions,” she said. Others also echo this optimism.
Motilal Oswal, in their November report, said the Acceptance of Necessity (AoN) worth nearly Rs 7 lakh crore were issued between FY24 – FY26 , which supports incremental order inflows over the next few years. A significant portion of these approvals, by value, came in the past 12 months. The firm also expects the defence capital outlay in FY27 and FY28 to be higher than that of the previous years, and to rise at 15% each year.
While PSUs continue to dominate high-value platform contracts, competition from private players is increasingly viewed as a long-term structural shift. The easing of entry barriers, greater use of consortium models and technology partnerships are expected to intensify this competition in the future
“India’s defence order books are robust, indicative of strong revenue for the next two to three years. Most capacities are over-booked, so what we would look out for in 2026 and beyond would be the execution of these orders — and the availability of required resources, skill-sets, people, MSME supply chains and capital, to fulfil present and future orders,” said Jyoti Gupta, lead research analyst with Nirmal Bang.
India’s defence exports have risen more than 15-fold over the last eight years, with potential to double to Rs 50,000 crore within the next five years, according to a recent B&K Securities note. Defence production is also expected to roughly double from the current Rs 1.5 lakh crore in FY25 to Rs 3 lakh crore by FY29, according to analysts’ estimates.
In November, the defence ministry said that 65% of defence equipment is now manufactured domestically—a marked shift from the earlier 65–70% import dependence. Motilal Oswal notes that across aerospace, defence electronics, missile space and shipyards, companies are driving a broad capacity-expansion cycle to meet rising long-term demand. HAL alone is estimated to spend Rs 15,000 crore as its own capex in the next five years.
India’s ‘Year of Reforms in 2025’ marked a pivotal moment in the nation’s quest for strategic autonomy and robust defence posture, all under the steadfast leadership of Prime Minister Narendra Modi. This year transformed policy pronouncements into tangible achievements, bridging the gap between ambition and execution in national security.
The government articulated five unwavering principles to combat terrorism: a robust response to any terror attack, zero tolerance for nuclear blackmail, no differentiation between terrorists and their state sponsors, prioritising terrorism in all bilateral dialogues, and an ironclad defence of sovereignty. These norms underscored India’s shift towards proactive deterrence.
India’s ‘Year of Reforms in 2025’ marked a pivotal moment in the nation’s quest for strategic autonomy and robust defence posture, all under the steadfast leadership of Prime Minister Narendra Modi. This year transformed policy pronouncements into tangible achievements, bridging the gap between ambition and execution in national security
Operation Sindoor exemplified this resolve. Triggered by the Pahalgam terror attack, India launched its most audacious military operation in over half a century on May 7, 2025. Special forces and precision munitions targeted terror camps deep within Pakistani territory, eliminating nearly 100 high-value militants.
The operation escalated on May 10, with strikes on 11 Pakistani air bases. Indian missiles, delivered with unerring accuracy, evaded all interception attempts, crippling enemy infrastructure. This demonstrated not just tactical superiority but also India’s operational maturity.
Also, indigenous systems dominated the strikes. BrahMos supersonic cruise missiles provided standoff precision, Rafale jets ensured air dominance, and indigenous loitering munitions neutralised fleeting targets. Such integration highlighted the maturity of India’s Aatmanirbhar defence ecosystem.
Beyond operations, India’s defence production soared past ₹1,54,000 crore in 2025, reflecting industrial momentum. The defence budget for 2025-26 climbed to over ₹6,81,000 crore, signalling sustained fiscal commitment to modernisation.
Acquisitions approved during the year totalled more than ₹4,30,000 crore. Key procurements included Apache attack helicopters for enhanced battlefield mobility, Rafale-M carrier-based fighters for naval aviation, next-generation heavy-weight torpedoes, and advanced surveillance platforms.
Indigenous milestones proliferated. The Indian Navy commissioned new warships and submarines, bolstering blue-water capabilities. Stealth frigates entered service, enhancing littoral warfare prowess with reduced radar signatures.
Beyond operations, India’s defence production soared past ₹1,54,000 crore in 2025, reflecting industrial momentum. The defence budget for 2025-26 climbed to over ₹6,81,000 crore, signalling sustained fiscal commitment to modernisation
The Agni Prime ballistic missile achieved a breakthrough with its first rail-based launch test, validating mobile deployment for survivability. Meanwhile, Made-in-India AK-203 assault rifles rolled out for infantry units, reducing import dependence.
Defence corridors in Uttar Pradesh and Tamil Nadu emerged as investment magnets, attracting over ₹9,100 crore. These hubs signed 289 Memorandums of Understanding, paving the way for ₹66,000 crore in future projects and fostering a self-reliant supply chain.
Private sector participation surged, with MSMEs contributing to subsystems for missiles and drones. Export orders for BrahMos and other platforms grew, positioning India as a reliable defence partner globally.
Technological leaps extended to space and cyber domains. ISRO’s successful tests of reusable launch vehicle components complemented DRDO’s advancements in hypersonic glide vehicles, fortifying India’s strategic triad.
The Army integrated AI-driven command systems, while the Air Force operationalised more Tejas Mk1A squadrons. Naval innovations included unmanned underwater vehicles for seabed warfare, aligning with multi-domain operations doctrine.
Globally, India deepened ties through QUAD and bilateral pacts. Joint exercises with allies honed interoperability, while technology transfers from friendly nations accelerated indigenous programmes.
Private sector participation surged, with MSMEs contributing to subsystems for missiles and drones. Export orders for BrahMos and other platforms grew, positioning India as a reliable defence partner globally
These developments reinforced deterrence against regional threats. Pakistan’s repeated provocations met swift rebuttals, while China’s border assertiveness faced resolved countermeasures, including new high-altitude deployments.
Economically, the sector generated thousands of jobs and spurred ancillary industries. Skilling initiatives trained over 50,000 youth in defence manufacturing, aligning human capital with industrial needs.
Additionally, private firms scaled up, supplying avionics and composites. Defence exports, led by BrahMos, breached new markets, elevating India’s global stature. Space-domain strides featured ISRO’s reusable tech demos alongside DRDO’s hypersonic, safeguarding satellite assets. Cyber defences hardened with indigenous firewalls and quantum-secure communications.
Technological leaps extended to space and cyber domains. ISRO’s successful tests of reusable launch vehicle components complemented DRDO’s advancements in hypersonic glide vehicles, fortifying India’s strategic triad
The Army adopted AI analytics for logistics, the IAF inducted TEJAS squadrons seamlessly, and the Navy pioneered UAV swarms. Tri-service integration advanced multi-domain warfare readiness.
Though challenges persisted, such as supply chain vulnerabilities and R&D funding gaps, yet 2025’s progress mitigated them. Overall, government’s push for 70% indigenisation by 2027 gained traction.
As the year drew to a close, India stood taller—equipped with cutting-edge capabilities, unyielding resolve, and a blueprint for self-reliance.
– The writer is a senior journalist and media consultant. The views expressed are of the writer and do not necessarily reflect the views of Raksha Anirveda.
