Article by Debalina Ghoshal
India’s defence industry is undergoing a revamp to upscale its defence manufacturing and production not only for domestic security purposes but also for export purposes. With a major focus by the government on privatisation, the defence industry is burgeoning to become one of the growth oriented manufacturing industries in India. While the growth story is leading the country towards a positive direction, this article argues that India must also refrain from becoming a war-driven economy.
A defence industry transcends into a war-driven economy when the sale of its weapon systems and sub systems could provide impetus to profit maximisation. Such industries have become a major source of the sustaining domestic economy by providing wider employment opportunities to people of the country. Co-development and co-production of weapon systems with foreign countries provide further scope for expansion of the defence sector. India wishes to become self-reliant in manufacturing industries in which the defence sector is also included.
With India’s defence budget growing and being complemented with growth in capital expenditure, defence sectors have much ray of hope to become a major player in manufacturing. There is little doubt in the fact that while service sectors remain an area for opportunities for growth, India’s major focus for job oriented economy must rely on the manufacturing industries. This is because service sectors are meant for providing services to people. They need employees to function and enable enterprises to render services to people. However, when service sector becomes employment generation sector rather than a service providing sector, common people tend to suffer.
Manufacturing industries hence, become one of the key drivers for industrial growth and growth in gross domestic product (GDP). According to primary reports, India’s defence production reached a record 1.78lakh crore in 2025-2026 which included seventy six percent from public sector enterprises and twenty-four percent from private sector enterprises.There is also tremendous potential for India’s defence industry in export sector which is clearly visible from the growth chart in the last decade: Rupees 686crores FY2013-14 to Rupess 38,424 crores in FY2025-26 which included impressible share of contribution by private sectors (Rupess17, 353 crores) in export. India has also increased the FDI limit in the defence sector to seventy-four percentage under the Automatic Route and up to hundred percent via the Government Route, attracting ₹6,670.59 crores in inflows by March 2026.
Defence industrial corridors are being set up to “catalyse indigenous production of defence and aerospace-related items.” Tamil Nadu and Uttar Pradesh are two such examples. States like West Bengal and Bihar also expected to receive impetus to promote defence industrial corridors. The previous government in Bengal also focused on building value chain for defence industries providing impetus to Micro Small Medium Enterprises to sustain the larger aspirations of Defence Minister Shri Rajnath Singh for an Eastern Defence Corridor. MSMEs will form the backbone for key defence players. In 2026, the Defence Minister, inaugurated the five brownfield projects in Kolkata.
Private sector enterprises are one of the keys to an orchestrated growth in defence manufacturing both for domestic purpose, as well as for export purposes. India needs an amalgamation of weapon systems for its own deterrence as well as for hard currencies by selling weapons to friendly countries. Domestic defence eco-system is the need of the hour to sustain and meet imperatives with technologically capable systems.
Need for Eco-System but Not A War-driven Economy
Nevertheless, India’s defence eco-system must refrain from transcending into a Military Industrial Complex (MIC). While both are looking towards maintaining a strengthened defence industry, the former may have lesser influence on government while the latter may have strengthened influence on the government through lobbies to pursue its defence related businesses. This could turn India into a war-driven economy and seriously undermine its Non- Alignment policy. Thus, India’s core focus must lie on industrial growth for job creation and meeting technological demands for security needs.
Research and development for greater participation in the international defence market to promote export of weapon systems that are qualitatively advanced must remain a major focus for India’s defence eco-system. As of now, India’s defence equipment has proved blessing in combat as well as a deterrent role. MICs could influence stakeholders in negative ways to pursue weapon systems and sub-systems that are less credible or strengthen credibility as exorbitant cost.
India’s choice of weapon systems has taken into consideration its own security environment rather than any pressure from lobbying groups. It must be noted that irrespective of the robustness of a weapon system, credible ‘defence by denial’ technologies would make offence a challenge. However, the main focus should be whether the weapon system has achieved its major targeting goal. Once that targeting goal is achieved, the loss or preservation of the weapon system is inconsequential.
India has been a firm believer of peace and negotiations rather than war being a way to achieve decisiveness. Diplomacy plays a very crucial role in India’s aspirations to gain strategic autonomy. Thus, restricting India’s defence eco-system to industrial growth rather than focusing on a robust MIC is a logical solution to meeting its own defence demands, earning profits, and also restricting itself from majorly influencing political and strategic imperatives in foreign countries.
Conclusion
India needs an eco-system that is more robust and transcendental. However, this eco-system must stop short of an MIC. This must become a major challenge that the government needs to pay heed to as with private enterprises. There is always a possibility of defence enterprises and associates conglomerating to become MIC.
