What is driving India's defense manufacturing sector growth?

Growth is driven by strong demand, record procurement approvals, increasing indigenisation, and accelerating exports, creating substantial order backlogs.

Why are defense company valuations increasing?

Valuations are justified by the sector's shift to a structural, long-duration growth story, with private companies showing premium margins and faster execution.

What are the risks for India's defense manufacturing?

A key risk is partial dependence on rare earth materials, where global supply is dominated by China.

Home / Business and Economy / India's Defense Boom: Orders Surge Amidst Indigenisation

India's Defense Boom: Orders Surge Amidst Indigenisation

15 Dec, 2025

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Summary

Defense sector experiences strongest demand in decades with large order books.
Nearly ₹3 trillion in defense procurement approvals cleared in 2025.
Elevated valuations are justified by the shift to a structural growth story.

India's Defense Boom: Orders Surge Amidst Indigenisation

India's defense manufacturing sector is currently experiencing a strong, multi-year upcycle characterized by substantial order books, record procurement approvals, and a growing emphasis on indigenisation and exports. Analysts observe this as one of the most robust demand environments in decades, with many defense companies holding contracted orders equivalent to two to five times their annual revenues.

While public sector undertakings continue to lead with large, long-duration platform orders, private players are rapidly expanding their capabilities in electronic subsystems, unmanned aerial platforms, and export-linked programs. The quality of order books, focusing on visibility and subsystem intensity, is now prioritized over sheer volume. Sector-wide backlogs are poised for further expansion following nearly ₹3 trillion in defense procurement approvals cleared in 2025.