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Defence industry of India

The Defence industry of India is a strategically important sector in India.[1] With the strength of over 1.39 million active personnel, it is the world's 4th largest military force and has the world's largest volunteer army. The total budget sanctioned for the Indian military for the financial year 2019 is $60.9 billion, about five times what it spends on education and welfare.[2]

Despite having a modest internal defence industry, India is the largest arms importer in the world, with most of its arms purchases coming in from Russia.[3] 12% of worldwide arms exports (by value) reach India.[4]

Military budget

The military budget of India is about 1.49% for year 2018-19 of the total GDP.[5] However, it spends nearly an equal amount in importing arms from other countries.

Its defence expenditure for the 2017-18 fiscal year, based on allottments by its Ministry of Finance was 86,488 crores for Defence capital and 296,000 crores for defence pensions.[6]

Service/ department-wise allocation as a percentage of total defence estimates in 2017-18:

  • Army: 55.9%
  • Air Force: 22.5%
  • Navy: 14.6%
  • DRDO: 5.7%
  • DGOF: 0.8%
  • DGQA: 0.5%

The Indian Army accounts for more than half of the total defence budget of India, with most of expenditure going to the maintenance of cantonments, salaries and pensions, instead of critical arms and ammunition. [7] [8]

State orders

India has been spending worth nearly $3.5 billion to boost its ageing Soviet era military equipment. It has been pushing for greater indigenisation of the military industry as India imports around 70 per cent of its defence hardware mainly from Russia, Japan, Israel and United States.[9]

Arms Exports

India’s track record as an arms exporter has been modest. It exports arms to Mauritius, Myanmar, Sri Lanka, Vietnam and the UAE.[10] In March 2011 New Delhi agreed to sell its first indigenously designed and built multi-role offshore patrol vessel (OPV) named Barracuda, to Mauritius. In March 2017, India finalised a deal with Myanmar for sale of indigenously developed lightweight torpedoes worth USD 37.9 million.Similar naval platforms were sold to Sri Lanka and Vietnam as well.[11]

In Sep 2017 Ordnance Factories Board secured its biggest export order from UAE for the supply of 40,000 pieces of a component used in Bofors artillery guns for Rs 322 crore.[12]


The production of Indian defence equipments prior to 2011 was completely in the hands of the Government of India. The Government of India also opened up the Foreign direct investment to 49% from the existing 26% and thereby increasing flow of funds from foreign countries. With the increase in FDI cap, private players such as companies from many developed countries will also be attracted to the Indian defence economy as they can have share in the Indian defence Companies.[13]


Name Specialization Revenue (As of 2015, except DRDO) Employees (As of 2015) Notes
Bharat Dynamics Ammunition and Missile systems 32.81 billion (US$470 million) 3,183 [14]
Bharat Electronics Avionics 70.93 billion (US$1.0 billion) 9,952 [15]
Bharat Earth Movers Transport 28.02 billion (US$410 million)
Defence Research and Development Organisation Research and Development Annual Budget of 2018-19 178.61 billion (US$2.6 billion) 30,000 [16]
Garden Reach Shipbuilders & Engineers Naval ships 16.94 billion (US$250 million) 3,133 [17][18]
Goa Shipyard Shipbuilding 6.81 billion (US$99 million) [19][20]
Hindustan Aeronautics Limited Aerospace manufacturer 177.53 billion (US$2.6 billion) 32,108 [21]
Mazagon Dock Limited Shipbuilding [22]
Mishra Dhatu Nigam Metallurgy [23]
Ordnance Factories Board Defence Equipment and Support 199.8271 billion (US$2.9 billion) 1,73,000 [24]

Make in India

The Modi government in its first year cleared 39 capital procurement proposals, of which 32 proposals worth 889 billion (US$13 billion) (or 96% of value of total proposals) were categorized as Buy (Indian) and Buy and Make (Indian)—the top two prioritized domestic industry-centric procurement categories as per the defence procurement procedure (DPP).[25]

In July 2015, the defence ministry eased export regulations and stopped demanding multiple assurances on end-use from foreign governments even for sale of components by Indian entities.[26]

There are several Indian SMEs that cater to the Defence industry by supplying sub-assemblies and components and providing services like system integration. Under the Make in India initiative, these organizations are set to enhance their manufacturing and development efficiency, thereby contributing to making India self-reliant in defence production. Some of the system Integrators catering to the Defence sector in India are Tonbo Imaging, Alpha Designs, Astra Microwave and SLN Technologies among others.[27]


  1. ^ "The seven homegrown firms fighting over India's $620 billion defence market". Quartz. Retrieved 12 November 2015.
  2. ^ "Key features - India budget 2018" (PDF). Ministry of economic affairs. Retrieved 16 October 2018.
  3. ^ "Nearly half of US arms exports go to the Middle East". Guardian. 12 March 2018. Retrieved 16 October 2018.
  4. ^ "Trends in international arms transfers 2017". SIPRI. Retrieved 16 October 2018.
  5. ^ "Military budget of India 2018". IDSA. Retrieved 16 October 2018.
  6. ^ Rajya Sabha TV (1 February 2017), FULL SPEECH: Finance Minister Arun Jaitley's Budget Speech | Union Budget 2017-18, retrieved 1 February 2017
  7. ^ []
  8. ^ []
  9. ^ "Arms race: India approves defence procurements worth $3.5 bn, says report - The Express Tribune". The Express Tribune. Retrieved 12 November 2015.
  10. ^ []
  11. ^ []
  12. ^ Majumdar, Arkamoy Dutta (30 November 2017). "India looking to scale up military hardware exports". Mint.
  13. ^ "Increase of F.D.I. Cap in Insurance & Defence Sector: Impact on Indian Economy | Adhrit Foundation". Retrieved 12 November 2015.
  14. ^ "BDL Annual Report" (PDF). Archived from the original (PDF) on 2 April 2016.
  15. ^ "Bharat Elec - Announces Q4 & FY15 results - Currency Research Reports". Retrieved 20 April 2016.
  16. ^ "Defence Budget 2018-19: The Imperative of Controlling Manpower Cost". Retrieved 24 February 2018.
  17. ^ Pike, John. "Garden Reach Shipbuilders & Engineers (GRSE)". Retrieved 20 April 2016.
  18. ^ "Annual Report 2013-2014" (PDF). Archived from the original (PDF) on 6 January 2018.
  19. ^ Pike, John. "Goa Shipyard Ltd". Retrieved 20 April 2016.
  20. ^ "Goa Shipyard Annual Report" (PDF).
  21. ^ "HAL India Annual Report" (PDF).
  22. ^ "Mazagon Dock Shipbuilders Limited - Ship Builder to the Nation". Archived from the original on 19 April 2016. Retrieved 20 April 2016.
  23. ^ "::Mishra Dhatu Nigam Limited::Home::,superalloy, titanium, special steel industry". Archived from the original on 1 May 2016. Retrieved 2016-04-20.
  24. ^ []
  25. ^ "Make in India: Big role for private firms in defence", Mint, 15 February 2016
  26. ^ "Make in India: How small tweaks in policy are drawing domestic and global firms to defence manufacturing", The Economic Times, 16 February 2016[permanent dead link]
  27. ^ "MSMEs can boost India's defence exports with policy support", The Economic Times, 4 February 2017