Blitz India Business
NEW DELHI: India’s defence production reached a record ₹1.78 lakh crore in FY2025-26 and exports ₹38,424 crore. Split each figure by ownership and an anomaly appears: private firms make roughly a quarter of what India produces, but ship close to half of what it sells abroad.
The production split is about 76 per cent public sector and 24 per cent private, the private share having risen from 22 per cent the previous year. On exports the ratio is 54.84 per cent public against 45.16 per cent private. A sector that is three-quarters state-owned in output but barely more than half state-owned in exports is telling you something specific about what each side makes. Public-sector undertakings build platforms — aircraft, warships, armoured vehicles — whose principal customer is, by design and by security logic, the Indian armed forces. Private firms are concentrated further down the chain in components, sub-systems, electronics, ammunition and structures, and those are precisely the items that fit into somebody else’s platform anywhere in the world. Exportability is a function of where you sit in the supply chain.
Two different businesses: platforms are sold to governments after years of negotiation; components are sold to manufacturers on commercial terms. The second travels far more easily than the first.
A finished platform is a diplomatic transaction. A sub-assembly is a commercial one. That difference, not capability, explains most of India’s export mix.
At a Glance
• Production, FY2025-26: a record ₹1.78 lakh crore, against ₹46,429 crore in 2014-15
• Production split: about 76 per cent public sector undertakings, 24 per cent private — up from 22 per cent in FY25
• Exports, FY2025-26: ₹38,424 crore, up from ₹23,622 crore — a rise of ₹14,802 crore, or 62.66 per cent
• Export split: 54.84 per cent public sector, 45.16 per cent private
• Growth by ownership: public sector exports up 151 per cent year on year; private firms up 14 per cent
• Reach: exports to more than 80 countries
The growth rates complicate that picture in an interesting way, and this is where a single year’s data should be read with care. Public-sector exports grew 151 per cent year on year while private exports grew 14 per cent, which means the surge that produced a 62.66 per cent overall increase came predominantly from the state-owned side. Large platform contracts are lumpy: one order can move a national total, and its absence the following year can appear as a decline that reflects contract timing rather than lost competitiveness. The private sector’s 14 per cent, by contrast, is the kind of growth that comes from many small repeat orders and tends to compound. Both patterns are healthy. They simply need to be read on different time-scales — one in cycles, the other in trend lines.
The constructive agenda follows directly from the diagnosis. If private firms already punch above their production weight in exports, the highest-return policy is to widen their share of production — through sustained sub-system outsourcing by the public-sector primes, longer-visibility order books that justify private capex, and testing and certification capacity that a mid-sized firm can access without a two-year queue. The 22-to-24 per cent movement in private production share is small in a single year and precisely the right direction; sustained for a decade it changes the industry’s structure. Exports now reach more than eighty countries, which is the harder milestone to reach and the easier one to build on: a customer who has bought a component and found it reliable is the natural first customer for a system. The base has been built. What remains is deepening it.