Private Sector Share in Defence Production Increases to 22.5%

India produced 22.56 % of all defence production, at 33,979 crore, in 2024-25, its largest contribution since 2016-2017 with the rest coming through the state-owned defence sector. This will indicate constant increment in the rate of private participation as there was 19.39% in 2022-23 and 20.93% in 2023-24. In the meantime however, Defence PSUs hold 57.5%, Ordnance Factories (14.49%), and non-defence PSUs (5.4%). This rise is in line with the policy changes since 2016 of promoting local production of defence equipment in order to minimise the reliance on imports. In India 2024-25 was also a year of highest-ever defence production, something more than thrice the amount, compared to the 2014-15.

Context 

• Policy Push - In 2016-17, the defence industry was thrown open to the private sector to achieve Atmanirbhar Bharat and limit its dependency on imports.

• Increased Budgetary Allocation - Defence budget has increased to the current 6.81 lakh crore (2025-26) and has allowed expansion in capacity.

• Strategic Goal India would establish to produce defence materials that would generate less importing of materials and high exports.

Key Points

Defence Production Data (2024-25):

• Total Production: 150,590 crore (highest-ever).

• The Private Sector: 33979 crore (22.56) which is the highest in 2016.

• PSUs: 57.50 % share.

• Ordnance Factories: 14.49 % share.

• PSUs non-defence: 5.4% share.

Trend in Private Participation:

• 2016-17: ~19% (after reforms allowing private entry).

• 2022-23: 19.39%.

• 2023-24: 20.93%.

• 2024-25: 22.56% → clear upward trajectory.

Importance of increased Private sector:

• Provides efficiency, innovation, competitiveness.

• Enables the integration with the global supply chains.

• Throws less import dependency and increases the strategic autonomy.

• Fosters creation of employment and technological exchange.

Growth Drivers Policy:

• Defence Production and Export Promotion Policy (DPEPP), 2020.

• Licensing and FDI norms simplification (up to 74% of automatic route).

• Initiation of Innovation of Defence Excellence (iDEX) to start-ups.

• Indigenisation drives include forbidding some defensive products to be imported in.

Conclusion 

Growth in the private sector component in defence manufacturing indicates the Indian movement towards defence self-reliance. Although the DPSUs still prevail, there is increased demand for the Private Parts as it enhances innovation and efficiency. They will remain essential to India in its exhibition ambitions of becoming an exporter of defence products as a sustained policy support and the partnership between the public and the private sectors stands to be an important part of the process.