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India’s defence production reached a new high of ₹1.78 lakh crore in FY26

ICICIdirect Research 18 Jun 2026 DISCLAIMER

News: India’s defence production reached a new high of ₹1.78 lakh crore in FY26, registering a growth of 15.6% YoY. Defence PSUs accounted for ~ 76% of total production, while the private sector contributed a record ~ 24% (~₹42,000 crore), up from 22% in FY25. The growth in domestic manufacturing also supported defence exports, which touched ₹38,424 crore during FY26, reflecting continued progress towards indigenous defence production and exports

View: The defence production growth of 15.6% YoY was broadly in line with industry expectations and reflects continued momentum in domestic manufacturing, driven by indigenisation initiatives, higher domestic procurement and growing export opportunities. The increasing contribution of the private sector is particularly encouraging as it reflects deeper participation by companies such as Solar Industries, Data Patterns, Astra Microwave, Paras Defence, Dynamatic Technologies, Zen Technologies, Premier Explosives and other defence-focused manufacturers. With the government setting an ambitious target of achieving ₹3 lakh crore of defence production (including Rs 50000 crore of exports) by FY29E (implies ~19% CAGR), we believe these targets, coupled with increasing private sector participation, expanding export opportunities and a strong domestic procurement pipeline, position the sector for sustained long-term growth across platforms

Impact: Positive

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