Defence production up 2.6x since FY15, as India pushes for indigenisation

Defence production up 2.6x since FY15

India’s push towards self-reliance in defence equipment for armed forces has borne fruit. Defence production has grown by double digits over the last decade, more than doubling from Rs 46,429 crore in FY15.

A Moneycontrol analysis shows that the pace of growth has picked up further post-pandemic as the country targets the goal of Rs 3 lakh crore of defence production by 2029.

In 2023-24, defence production had reached Rs 1.27 lakh crore; the government is expecting it to hit Rs 1.6 lakh crore this fiscal.

Between 2019-20 and 2023-24, defence production grew at a compounded annual growth rate of 12 percent compared with the 11.2 percent growth witnessed in the first term of the government.

On January 15, Prime Minister Narendra Modi commissioned three major naval combatants, developed and designed indigenously. INS Surat has three-quarters of its content from indigenous sources, while INS Nilgiri has been designed by the Indian Navy’s Warship Design Bureau.

The rise in defence production has also contributed to higher exports from the country.

India is becoming a defence exporter as well.

India’s defence exports reached Rs 21,083 crore in FY24, rising 33 percent from the previous year.

Defence exports have expanded nearly 10 times since FY15, when they were just Rs 1,900 crore.

“A comparative data of two decades, i.e. the period from 2004-05 to 2013-14 and 2014-15 to 2023-24, reveals that there has been a growth of 21 times in the defence exports. Total defence exports during 2004-05 to 2013-14 were Rs 4,312 crore, which has gone up to Rs 88,319 crore in the period from 2014-15 to 2023-24,” the government had noted earlier this year in April.

PSUs dominate the scene

Further analysis shows that private sector participation is yet to pick up in the field.

Private defence firms’ share in defence production has remained unchanged between 19-21 percent since 2016-17, according to data from the defence ministry dashboard.

Instead, the share of old defence public sector undertakings has risen during this period. While old PSUs had a 54.6 percent of total production in 2016-17, it rose to 58.4 percent by 2023-24.

The share if new defence PSUs declined from 20 percent to 15.3 percent during this period.