India’s defence sector is stepping into a new era. From being a nation that once relied heavily on imports, India is now quietly becoming a key player in the global defence supply chain. A recent push from NATO to significantly ramp up military spending across member countries is turning attention towards nations like India that can fill critical gaps — not just with cost advantages but with growing technological strength.
Europe’s demand may be India’s opening
NATO’s new commitment to raise defence spending to 5% of GDP by 2035 isn’t a token gesture. It reflects serious concern over the alliance’s readiness, especially after the Russia–Ukraine war revealed Europe’s reliance on imports, limited industrial capacity, and outdated defence infrastructure.
European nations want more control over their military supplies, but rebuilding that industrial base will take time. In the short and medium term, they will need reliable, cost-efficient partners. That’s where India enters the picture.
India offers not just affordability but credibility. As a democratic country with neutral strategic alignment, it presents fewer political complications than some other major suppliers. And it’s not just about politics — India’s capabilities have grown. From precision-guided munitions to UAVs and missile systems, the offerings are no longer limited to basic components.
Stock markets react to strategic developments
Indian equity markets have been quick to sense what this could mean. Shares of firms like Bharat Electronics, BEML, Data Patterns and others saw notable gains following NATO’s announcement. This wasn’t just a knee-jerk reaction. It reflects long-term optimism about the role Indian manufacturers might play as global demand grows.
Investors looking to participate in this trend don’t need to go through complex processes. Today, anyone can open demat account online and explore a range of companies engaged in defence production — from traditional public-sector names to newer, agile private players.
Reliance Defence and the Rheinmetall agreement
A prime example of India’s growing clout is the recent Rs 600 crore order won by Reliance Defence from Rheinmetall Waffe Munition GmbH, one of Germany’s largest defence companies. The order includes a range of artillery ammunition and explosives and will be fulfilled from a new manufacturing unit in Maharashtra.
This isn’t Reliance’s first such tie-up. The company has already entered into strategic agreements with France’s Dassault Aviation and Thales, and Germany’s Diehl Defence. These deals aren’t just transactional — they’re collaborative. Joint development, transfer of technology and high-spec manufacturing are all part of the conversation.
India’s edge: not just cost, but capacity and credibility
One might assume India is chosen primarily for low costs, but the picture is more complex. Europe is currently facing shortages in skilled defence-sector workers and limited industrial capacity — especially in high-tech areas such as missile systems and aerospace. India’s growing base of engineers, its defence R&D push, and its ability to scale quickly make it a strong candidate to plug these gaps.
Moreover, the Indian government has been laying the groundwork for this for some time. Policies around licensing, exports and R&D funding have steadily improved. Procedures for export approvals have been simplified, and support is being extended to both large players and MSMEs in the defence ecosystem.
A look at the numbers
The figures speak volumes. In the financial year 2024–25, India exported defence equipment worth Rs 23,622 crore — a 12% increase over the previous year. Just a decade ago, this figure stood at only Rs 686 crore. The goal now is to hit Rs 50,000 crore by 2029.
Interestingly, it’s the private sector that’s leading the charge. In FY 2024–25, private companies contributed over Rs 15,000 crore to India’s total defence exports, while public-sector undertakings made up the rest. This reflects a broader shift towards competitive, innovation-driven production — something that international partners are increasingly looking for.
The growing role of private firms
While public-sector giants like HAL and BEL remain important, private players such as Tata Advanced Systems, L&T Defence and Reliance Defence are now making their mark. These companies are not only executing domestic orders but also attracting international attention through joint ventures, research collaborations and high-value exports.
According to analysts, India’s defence exports could cross Rs 203 billion by FY25. Europe is expected to place a growing share of those orders — not just for simple parts, but increasingly for complex systems and subassemblies.
Strategic alignment matters more than ever
Another factor working in India’s favour is trust. Unlike exports from certain other regions, Indian defence partnerships are seen as transparent, rules-based and consistent with international norms. This adds weight in an environment where defence imports are about more than just price and performance — they’re about long-term alignment.
India is not just supplying materials anymore. It’s becoming part of the conversation on co-development and next-generation systems, whether in artificial intelligence, autonomous weapons or cybersecurity solutions.
Looking ahead: what needs to be done
For all the promise, challenges remain. Defence manufacturing demands rigorous quality, reliable timelines and strict adherence to international standards. Indian firms must continue investing in testing, compliance and skilled workforce development.
On the policy side, export licensing and customs procedures still present hurdles. These need to be resolved to allow faster turnarounds and smoother logistics. Continued support from the government — in the form of funding, trade facilitation and policy clarity — will be key.
Most importantly, India must keep climbing the value chain. Supplying parts is a good start, but the future lies in integrated systems, platform manufacturing and intellectual property creation.
Conclusion: India’s moment in the making
India’s rise as a defence exporter isn’t accidental — it’s the result of years of steady reforms, industrial investments, and smart diplomacy. As global defence demand expands — especially across Europe — India has the opportunity to move from the sidelines into a central role.
For investors, this is an opportunity to look beyond the short-term. The current interest in defence stocks is part of a larger story — one of industrial transformation and international relevance. For those ready to take part, it’s now easier than ever to open demat account online and start exploring this evolving space.
India’s defence sector isn’t just growing — it’s maturing. And over the coming years, it may well become one of the country’s most strategic export engines.
