Blitz India Business
NEW DELHI:India’s defence production reached ₹1.78 lakh crore in FY26. The headline is the total. The structural fact is the split: defence public sector undertakings accounted for 54.84 per cent of it, and the private sector for 45.16.
That ratio is the most useful single statistic about Indian defence manufacturing, and it is almost never the one quoted. A state-owned industrial base can be scaled by decision — a ministry can order capacity into existence. It cannot easily be made competitive by decision, because competitiveness is a property of firms that face consequences. A base approaching an even split between public and private production is one in which cost, delivery schedule and quality are being tested against an alternative supplier rather than assumed. That is the mechanism by which defence manufacturing eventually becomes exportable, and it is why the second number in this story matters more than the first.
₹84,643 crore to ₹1.78 lakh crore: defence production has roughly doubled since 2020-21. The private sector now accounts for 45.16 per cent of the total, against 54.84 per cent for public sector undertakings.
Capacity can be ordered into existence. Competitiveness has to be competed into existence. The gap between those two sentences is most of industrial policy.
At a Glance
• Defence production, FY26: ₹1.78 lakh crore, up 15.6 per cent from ₹1.54 lakh crore
• Against 2020-21: ₹84,643 crore — a rise of about 110 per cent
• Split: DPSUs 54.84 per cent, private sector 45.16 per cent
• Exports, FY26: ₹38,424 crore, up 62.7 per cent from ₹23,622 crore
• Exporting firms: 145, up from 128; destinations, more than 80 countries
• 2029 targets: ₹3 lakh crore production and ₹50,000 crore exports
• Defence budget: ₹2.53 lakh crore in 2013-14 to ₹7.85 lakh crore in 2026-27
The export data tells the same story in a different register. Exports reached ₹38,424 crore in FY26 against ₹23,622 crore — a rise of 62.7 per cent — and the number of firms exporting rose from 128 to 145, supplying more than 80 countries. Growth rates in exports can be produced by one large contract; a broadening of the exporter base cannot. Seventeen additional firms clearing the considerable regulatory and certification burden of defence export is evidence of depth spreading through the supply chain, into the component and subsystem tiers where an industrial base is actually built. That tier is also where the employment and the engineering skill accumulate, and where capability spills over into civil aerospace, marine engineering and precision manufacturing.
The targets for 2029 — ₹3 lakh crore in production and ₹50,000 crore in exports — require production to grow roughly 19 per cent a year from here and exports around nine. On recent performance production is the harder of the two, which is a useful corrective to the assumption that exports are the binding constraint. The structural point for the long view is that the defence budget has risen from ₹2.53 lakh crore in 2013-14 to ₹7.85 lakh crore in 2026-27, and a procurement budget of that size is the largest single instrument of industrial policy the Indian state possesses. Used to buy the cheapest item available it produces purchases. Used to give domestic suppliers a predictable, multi-year order book against published specifications, it produces an industry. The evidence in the FY26 numbers — a near-even public-private split, a widening exporter base — suggests it is currently being used the second way. The measure to keep watching is not the production total. It is whether the private share keeps rising, and whether the count of exporting firms keeps climbing past 145.