Time for private industry to take a lead in defence manufacturing: Rajnath

Defence Minister Rajnath Singh's call to private industry follows the MoD designating 2025 as the 'Year of Reforms', including streamlining defence acquisition, a long-standing challenge

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The time has come for the private industry to take a lead in India’s defence manufacturing sector, Defence Minister Rajnath Singh said at Aero India 2025 in Bengaluru on Wednesday, less than two weeks after the Union Budget allocated Rs 27,886 crore for acquiring weapons and systems from domestic private players.

 

Addressing the valedictory event of the 15th edition of Asia's biggest aerospace and defence exhibition, the defence minister stated: "India is going through a revolutionary phase of transformation and is moving towards becoming a global leader in defence innovation and aerospace technology."

 

Singh’s call to the private industry follows the Ministry of Defence's (MoD's) decision earlier this year to designate 2025 as the "Year of Reforms”. This initiative includes promoting public-private partnerships (PPPs) and streamlining the defence acquisition procedure, which has long posed challenges for both the armed forces and the private sector, to make it more efficient and time-sensitive. In December, the MoD had announced that the Defence Acquisition Procedure (DAP) 2020 is "likely to undergo a complete revamp in 2025”.

 

In recent years, both public and private enterprises have played a vital role in India’s defence production, which reached a record high of nearly Rs 1.27 trillion in 2023-24 (FY24). Defence public sector undertakings (DPSUs) and other PSUs contributed 79.2 per cent, while the private sector accounted for 20.8 per cent of the total. This represents a 16.7 per cent increase in defence production from the Rs 1.09 trillion recorded in FY23.

 

In line with the MoD's decision to strengthen domestic industries and enhance self-reliance in the armed forces, Rs 1.11 trillion (Rs 1,11,544.83 crore) has been earmarked for procurement from domestic sources in FY26. This accounts for 75 per cent of the Rs 1.49 trillion (Rs 1,48,722.80 crore) modernisation budget, which is the portion allocated for capital acquisition within the total Capital Outlay. Notably, Rs 27,886.21 crore — 25 per cent of the domestic allocation — is specifically designated for procurement from domestic private industries.

 

Of the total Rs 6.81 trillion (Rs 6,81,210.27 crore) allocated to the MoD for FY26, Rs 1.8 trillion (Rs 1,80,000 crore) — representing 26.43 per cent of the total — is designated for Capital Outlay on Defence Services.

 

The defence minister noted with appreciation that while 65-70 per cent of defence equipment was imported a decade ago, nearly the same percentage is now being manufactured in India. He asserted that the country has a robust defence industrial complex, comprising 16 DPSUs, 430 licensed companies, and around 16,000 micro, small, and medium enterprises (MSMEs).