Presenting her sixth interim budget (2024-25) Budget in a row, Finance Minister of India Nirmala Sitharaman has announced a new scheme to strengthen deep tech involvement in the defense sector. According to an ICRA report, the private sector firms in the country are expected to receive defense contracts worth Rs.60,000 crore in FY 2024-2025, making up about 22 percent of the industry's overall size.

India, one of the strongest military forces in the world today, is better positioned than ever for indigenous arms production and boasts a growing defense budget. The private sector companies are gaining importance in the segment big time. As of 2023, the defense segment has engaged 393 startups /MSMEs/individual innovators, and 270 contracts have been signed.

According to IBEF data, the government has already earmarked funds to promote indigenous design and manufacturing and procurement from indigenous sources. For FY24, the fund allocation ratio stands at 67.75:32.25 between Domestic and Foreign procurement in the Capital Acquisition Budget of the Ministry of Defense (MoD). In addition, the MoD has also directed spending of Rs. 1,500 crore (US$ 181.1 million) towards procurement from startups.

On the other hand, the growing role of exports in India's defense portfolio can’t be neglected anymore. India recently signed a defense contract with the Philippines in January 2022, valued at $375 million—the largest in Indian history. The contract involves the supply of shore-based anti-ship variants of the BrahMos missile system. As India looks forward to boosting all aspects of defense and manufacturing, the private companies in the industry are expected to have great opportunities ahead.