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The Defence Ministry is gearing up to sign ₹2 trillion worth of defence contracts this year, with the bulk set to go to Indian firms.
What’s going on: the Ministry of Defence (MoD) looks to sustain the procurement momentum from FY25. Last year, the MoD signed 193 contracts, out of which 177 (92%) went to domestic companies, with a value of about ₹1.69 trillion, representing 81% of the total spend.
The why: maintaining this high level of utilisation and domestic sourcing is to make sure that the ministry strengthens its case for a bigger defence budget going forward.
A larger domestic base enhances supply chain resilience in critical areas.
Zoom out: as part of this strategy, foreign OEMs will now be required to set up manufacturing operations in India if they want to participate in procurement orders. This is aimed at driving greater localisation and ensuring that more high-end defence tech is built in-country.
Key focus: India has a vibrant civilian drone ecosystem but most systems are still not military-grade. Recent trials showed only a handful around three to four promising companies are currently close to meeting required standards. Some of these players are fully indigenous, while others are working with foreign technology partners.
