By 2047, India aims to command a ₹8.8 trillion defense economy — six times its current size — and emerge as a true global military power capable of designing, developing, and exporting advanced weapons systems at scale.
Strategic resilience has emerged as the defining imperative for the Indian defence industry in 2026, transitioning from a policy goal to a mandatory component of national security. Driven by evolving geopolitical tensions and the need for autonomy, India is accelerating its shift toward a robust, indigenous defence ecosystem.
Strategic resilience has emerged as the defining imperative for the Indian defence industry in 2026, transitioning from a policy goal to a mandatory component of national security. Driven by evolving geopolitical tensions and the need for autonomy, India is accelerating its shift toward a robust, indigenous defence ecosystem.
Self-reliance (Aatmanirbharta) is recognised as critical for ensuring that India’s armed forces are not constrained by foreign sanctions or supply chain vulnerabilities. The need to diversify away from traditional, lengthy foreign supply chains, which are susceptible to disruptions, is critical.
Future wars demand “technological superiority”, rapid innovation, with a strong focus on AI, cyber warfare, autonomous systems, and space-based defence solutions. The Indian government is moving towards opening up high-end manufacturing, including ballistic missiles, to the private sector.
Confederation of Indian Industry’s (CII) recent Annual Business Summit 2026 covered the theme “The Future – Global Economy, Industry, and Society.” Defence industry was a major component.
War Fighting – A Whole of Nation Approach
Modern wars begin at short notice, often through trigger incidents like happened in Op Sindoor. Systems will be penetrated, missiles and drones launched.
Ukraine saw drone attacks as routine as the sunrise. In fact, the war has become a laboratory for drone warfare. In Op Sindoor, and later to a more elaborate extent in the Iran War, the focus was on command and control networks, airbases, air defence systems, missile infrastructure, defence-industrial and manufacturing hubs, R&D centres, electronics hubs- once considered rear areas- were treated as frontline targets. The logic was, if a nation cannot produce, repair, or communicate, it cannot fight. Modern kill chains are no longer linear. They are AI-assisted, data-driven, and continuously adaptive.
The most important, yet underappreciated, dimension is not physical but psychological. Modern conflict is increasingly fought in the cognitive domain. Information discipline, societal cohesion, and narrative stability are no less important, where wars are fought as much on screens as on borders. The national mind-set and resilience become strategic assets.
The war is now a whole-of-nation approach, where industry and its ability to design and produce weapons and platforms with surge capacities. Iran’s resilience has brought the US to the negotiation table.
Operation Sindoor reflected India’s maturity in the application of power without escalation. Space and cyber are important domains of action.
Alliances and partnerships have become transactional. India has to prepare beyond just military. Foreign dependence on platforms, sub-systems, semiconductors, special materials, communications equipment are all strategic vulnerabilities.
The message for India is adapt early. India’s strategic imperative is to attain strategic autonomy through indigenisation and to build a credible, modern deterrent by developing advanced indigenous platforms and seamlessly integrating adopting multi-domain operations to achieve regional dominance.
India’s Defence Production
India’s defence manufacturing output is currently ₹1.54 lakh crore ($18.5 Billion) and exports have surged by over 62 percent to an unprecedented ₹38,424 crore ($4.6 Billion) in one year. Defence production is projected to surge to ₹8.8 trillion ($105 Billion) by 2047, with significant investments in indigenous platforms like the Tejas LCA, AMCA fifth Generation fighter, INS Vishal (Indigenous Aircraft Carrier 65,000 ton IAC-III), Project 75I (Conventional Stealth Submarines with Air-Independent Propulsion), Project 77 (Nuclear Attack Submarines – SSN), the Zorawar Light Tank (25-ton class for mountain warfare) slated for induction by 2027, and the Future Main Battle Tank (FMBT), among others.
India has fast emerged as a global defence manufacturing hub, with exports targeting a nine-fold increase to ₹2.8 trillion ($33.6 billion) by 2047, supplying to over 80 nations.
India’s Evolving Transformation and Challenges
From a nation in fiscal crisis a few decades ago, India is today the fastest-growing economy. India has nearly one-third of the global STEM (Science, Technology, Engineering and Math) workforce, and a massive startup ecosystem, a trend that is accelerating.
Yet economic growth on its own does not guarantee security or sovereignty. Despite being the world’s fifth-largest defence spender ($86 billion), India’s domestic defence ecosystem still depends on foreign defence technologies and platforms that limit agility and innovation, and force heavy imports.
Nearly 30 per cent of inputs for automotive, electronics, semiconductors, pharmaceuticals, and chemicals come from China, which is otherwise an adversary nation. Simultaneously, the country faces an urgent need to generate millions of new jobs and redeploy technical talent as AI disrupts traditional IT services, making strategic autonomy both a security and economic imperative.
A CII assessment suggests that to bolster Indian resilience, there are opportunities for entrepreneurs in defence modernisation through innovation, domestic production of software-defined systems, and advanced manufacturing that could transform India into a global strategic industrial partner.
Doing so requires a renewed innovation ecosystem that incentivises and rewards those who are willing to take on the country’s most critical challenges. In this era of technological disruption and geopolitical restructuring, it’s the most consequential investment opportunity for India.
Building Indigenous Defence Capabilities
India’s defence sector offers untapped opportunities for modernisation. Government policies are spearheading the Make-in-India effort. Policies like spending 75 percent of Capital budget on buying Indian, constantly growing Positive Indigenisation List (PIL) with over 5,000 items already, incentivising R&D, supporting ease of doing business and allowing easier Foreign Direct Investment (FDI) are all supporting.
Domestic procurement for defence systems has increased considerably in the last decade. This growth has largely been fuelled by state-owned enterprises producing large, high-capability platforms like combat aircraft, missiles, radars and artillery.
Let India Selectively Bridge Gaps
The clear gap in India’s defence industry posture is innovation. Much of India’s advanced defence equipment is imported, and these are further constrained by export controls on defence and dual-use technologies. India is invariably offered the older generation technology, and has to pay excess cost, and has to live with untenable dependence.
To enable Indian resilience and sovereignty, the country must concentrate on few foundational technologies: autonomous systems, electronic capabilities, and aero-engine.
Indigenous Autonomous Systems
The present and future of warfare is in autonomous military systems that operate across all warfare domains- air, land, sea, and space- and enhance speed, precision, and survivability while reducing risk to human lives. These systems are designed to operate with varying degrees of independence.
Building unmanned aerial systems (UAS), unmanned surface and sub-surface vehicles/vessels, and integrating with local control networks, and produced at scale, is a strategic necessity. These platforms must be engineered for India’s challenging geospatial conditions (high altitude, heat, dust) and improve through rapid domestic iteration. India also needs Counter-UAS systems and loitering munitions.
India’s top UAS companies include Bharat Forge, ideaForge Technologies, Garuda Aerospace, Zen Technologies, Hindustan Aeronautics Ltd (HAL), Tata Advanced Systems Limited (TASL), Adani Defence and Aerospace, Newspace Research Technologies, Paras Defence and Space Technologies, Sagar Defence Engineering, Dhaksha Unmanned Systems, Asteria Aerospace, and DroneAcharya Aerial Innovations. Companies like Solar Industries and ZMotion Autonomous Systems are leading in developing indigenous loitering munitions such as the Nagastra.
Electronic Warfare Capabilities
As conflict becomes increasingly digital, control of the electromagnetic spectrum will be as decisive as firepower. India has capable missile defence systems, but using expensive munitions against small, cheap drones is economically unsustainable. Scaling protection requires electronic warfare capabilities embedded in radars, software-defined radios, mission computers, lasers and edge-AI modules that can neutralise threats without kinetic kill. Building these capabilities at home through a new generation of defence lead-contractors (primes) is crucial.
Aero Engine Development
India has a multipronged plan for developing and manufacturing aero-engines in India. The key efforts include the 110kN Advanced Aero Turbofan Combat Engine (AATCE) and the Kaveri Derivative Engine (KDE) (48-52kN) for drones, aiming to reduce dependency on foreign suppliers. Through the AATCE project, the Gas Turbine Research Establishment (GTRE) is developing a 110 kN high-thrust engine, with plans for private industry partnership in design, manufacturing, and certification. KDE is a dry (non-afterburning) variant that has completed significant testing and is planned to power the DRDO‘s Ghatak UCAV.
Currently, indigenous development without foreign expertise difficult in the set timeframe. The deal with General Electric to co-produce F414 engines in India continues, focusing on transferring critical technologies for the LCA Mk2. For the 5th generation AMCA engine, India plans to collaborate with foreign partners (France‘s Safran or the UK’s Rolls Royce), through a 10-year roadmap initiated for prototype development. India is negotiating for total technology transfer for the 110kN engine. Future plans include a 120kN engine certified by the late 2030s, followed by a 6th-gen adaptive version by the mid-2040s.
The push aims to transition from assembling imported parts to total technological sovereignty, addressing challenges in hot section materials and design.
The key challenges remain high capital requirements, technology transfer bottlenecks, and the need for significant R&D budget increases (up to 15 percent of the defence budget).
India’s AMCA Approach
India’s Advanced Medium Combat Aircraft (AMCA) approach is an indigenous, 25 ton, twin-engine fifth-generation stealth fighter program managed by the Aeronautical Development Agency (ADA). It utilizes a public-private partnership model that fosters domestic manufacturing and self-reliance (Aatmanirbharta). The program is aimed at achieving air superiority with projected service induction by 2035. The AMCA approach distinguishes itself from previous Indian defence programs through a highly structured and open framework. The execution model involves a Public-Private Partnership that invites both private and public sectors to compete. Indian companies can bid independently, as joint ventures, or as consortia.
The model leverages and scales up the capacity of private-sector giants (such as Tata, L&T, Adani, and the Kalyani Group) to build the fighter prototypes. By standardizing components and opening bids competitively, the government aims to keep the aircraft highly cost-efficient compared to similar jets globally while simultaneously building a localised aerospace hub.
Prototype development funding is already underway, with initial full-scale structural tests slated for 2027 and the first flight tests targeted for 2029–2030.
Advanced Manufacturing
It is time India invests in next-generation manufacturing capabilities by resolving persistent productivity and quality issues among its 65 million small and mid-sized enterprises. Innovative business models aimed at scaling productivity can unlock this capacity.
India’s advanced manufacturing initiatives are anchored by the flagship Make in India program, aiming to transform the country into a global design and production hub. Government efforts focus on scaling up frontier technologies, boosting supply-chain resilience, and localising high-tech components through targeted, multi-billion dollar incentive frameworks.
Spanning 14 key sectors, including advanced chemistry cells, semiconductor packaging, drones, and medical devices, these schemes provide financial incentives linked directly to incremental production sales, driving massive investment and global supply-chain integration. SAMARTH Udyog Bharat 4.0 is an initiative by the Ministry for Heavy Industries to boost competitiveness in the capital goods sector by accelerating Industry 4.0 adoption.
National Manufacturing Mission (NMM) is a long-term strategic policy pushing for advanced manufacturing, the establishment of the Global Frontier Technology Institute (GFTI), and the planned construction of 20 “Plug & Play Frontier Technology-enabled Industrial Parks” across the country.
The Department of Science & Technology (DST) operates an Advanced Manufacturing Technologies program focusing on specific thrust areas like nano-materials, precision manufacturing, bio-manufacturing, and advanced forming processes.
The Defence Production and Export Promotion Policy (DPEPP) utilizes smart factories, predictive maintenance, and robotic automation to foster precision engineering for aerospace, weaponry, and military electronics.
Innovation Ecosystem for Resilience
India is rapidly building an indigenous, tech-driven defence innovation ecosystem to shift from platform-based warfare to ‘system of systems’ combat. By nurturing startups, streamlining procurement, and integrating AI and drones, the nation is actively engineering self-reliance against hybrid and cyber-warfare threats.
Core initiatives driving resilience, the Ministry of Defence (MoD) has established targeted programs to fund R&D and bridge the gap between academic research and commercial deployment. iDEX (Innovations for Defence Excellence) fosters a dynamic ecosystem by engaging Micro, Small and Medium Enterprises (MSMEs), individual innovators, and academia to solve specific military problem statements. ADITI scheme targets critical and strategic defence technologies, providing grants of up to Rs 25 crore per project to startups for early-stage product development. The Technology Watch Tool aligns the precise capability requirements of the Armed Forces with ongoing industry innovations to prevent duplication and speed up deployment. Technological focus areas to achieve absolute self-reliance by 2047, including AI & Machine Learning, developing algorithms for autonomous combat systems and real-time sensor data fusion, expanding the production of loitering munitions, micro ROVs, and anti-drone jammers. Mastering Quantum communication, cyber-defence, space situational awareness, and hypersonic technology.
Success requires the right combination of patient capital, deep partnerships between entrepreneurs, industry players, and policymakers, and a network of founders supported by those who have navigated similar challenges across the world.
Key Initiatives for Resilience
The Defence Acquisition Procedure 2020 (DAP) was updated to streamline procurement and encourage indigenous research and development (R&D). MSMEs are being encouraged to move beyond vendor roles to become key partners in the national security ecosystem, with a massive potential ₹10 lakh crore ($120 billion) opportunity.
Operation Sindoor exemplified the integration of military, industry, and laboratories, emphasising collaborative innovation and “jointness” across air, sea, land, space, and cyber domains. Collaborations with nations like Russia, France, Israel, and Greece have been deepened to strengthen indigenous production capabilities.
By 2047, India aims to become a fully self-reliant, all-domain military power. The focus is on building a “productive strategic shield” that supports rapid indigenisation, such as the Mission Sudarshan Chakra for layered missile defence, expected to mature between 2030 and 2040.
To Summarise
India’s strategic approach is defined by a policy of multi-alignment and strategic autonomy, with the ambition of emerging as a significant pole in its own right, supported by military power commensurate with its growing economic strength.
The nation confronts a complex two-front security challenge, which necessitates the development of credible deterrence capabilities and a robust defence industrial base.
Supply Chains and Strategic Resilience are the new imperative for the defence industry. Understanding the evolving global landscape and its profound implications for India’s defence and industrial capabilities is important. Enhancement of indigenous manufacturing prowess and the establishment of robust supply chains are critical to effectively navigate complex geopolitical challenges and foster both national security and economic growth. All this is imperative for a “Strong India” to underpin the national vision of a “Developed India” by 2047.
Indian defence forces must transition towards a technologically advanced, fully integrated, and multi-domain military force by 2047. This ambitious roadmap includes a crucial period of consolidation between 2030 and 2040, ultimately leading to an era of unparalleled excellence by 2040.
India is fast transforming into a global defence manufacturing hub. The Self-Reliant India Initiative is central to this strategic posture. The aim is to achieve a defence production output by 2047 that is a six-fold increase from current levels.
The overarching vision includes the development of an ecosystem dominated by agile deep-tech unicorns operating in synergy with established industry players.
A steadfast focus on improving quality, prioritising innovation through dedicated R&D efforts, and ensuring speed in delivery. A critical imperative is the reduction of dependency on China for base materials. Strategic partnerships are crucial for navigating global complexities.
Ensuring a level playing field for the private sector and facilitate the effective transfer of technologies developed by the DRDO to Indian industry. To date, over 2,200 technologies have been successfully transferred, generating significant production value.
The Defence Acquisition Procedure (DAP) 2020 was under revision, designed to accelerate modernisation efforts, propel Jointness across different defence services, and seamlessly integrate national security objectives with technological advancement. There is a strong emphasis on ownership of Indian technology, design, and Intellectual Property Rights (IPR). The priority is to “Buy Indian IDDM” (Indian Designed, Developed, and Manufactured) categories, with an enhanced indigenous content requirement, increased from 50 to 60 per cent.
Contracts valued at approximately ₹4.5 lakh crore ($54 billion) have been awarded in the last 1.5 to 2 years. Notably, over 90 per cent of the contracts (70 per cent by value) have been awarded to the domestic industry, even during periods of emergency procurement.
Government fast-tracked procurement decisions for readily available equipment expected to be completed within a maximum of six months.
Indian manufacturers must significantly enhance their capabilities in leveraging AI for planning, forecasting, and predictive analysis. Scaling up by MSMEs is a national imperative. Collaborative public-private partnerships is here to stay.
Consistent and predictable government policies are deemed essential for attracting and sustaining long-term industry investment. A cohesive and integrated approach to skilling initiatives across the entire defence ecosystem is required to drive sustainable industry growth.
Nation has to prepare for rapidly scaling drone production, driven by necessity and collaborative efforts. The country must identify and focus on niche technologies, and try to become a global leader. The unwavering emphasis is on indigenous design and development, and the resolute drive towards self-reliance.
The overarching vision is to forge an ‘Aatmanirbhar, Agrani, and Atuliya Bharat’ through strategic partnerships, the attainment of technological sovereignty, and the development of a robust, integrated defence industrial base.
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