Statsguru: Six charts explain increasing defence production in India

India’s domestic defence production crossed the Rs 1 trillion mark for the second year and was at Rs 1.27 trillion in 2023-24. The year-on-year growth has accelerated from single-digit levels seen before the pandemic to nearly 17 per cent in 2023-24, according to the latest government figures (chart 1).

Data shows that the share of private defence manufacturing companies in India has been consistent at about a fifth despite an increase in private defence companies and defence startups. The public sector still accounts for the majority of production. The government had mandated procurement targets to boost involvement and support to micro, small and medium enterprises (MSMEs), which mainly provide components to the defence industry. This has translated into more orders for small businesses as production scaled up (chart 2).

 

   

Exports have exceeded Rs 21,000 crore in 2023-24, a record for India. Exports include small arms, protective gear, and artillery, among other items. The total figure is nearly twice the level seen in 2018-19 (chart 3).

 

The rise in exports comes even as India remains among the world’s biggest arms importers, with others such as Saudi Arabia and Qatar topping the list between 2018 and 2023. The dependence on Russia has come down lately, falling to 36 per cent from over 58 per cent earlier (charts 4,5).

 

The majority of the defence budget (53 per cent) goes towards salaries, allowances, and defence pensions. The share of
defence in overall government expenditure has been coming down and was at 13 per cent in February’s interim budget, Business Standard had reported earlier.

As a share of gross domestic product (GDP), India spends more than many key emerging market peers. Only Russia outspends India among key emerging market peers. The United States spends more relative to GDP among advanced economies, but others such as Japan and Germany spend considerably less (chart 6).