Imagine standing on the edge of a battlefield—not one of swords and shields, but one of technology and innovation. This isn’t just about wars anymore; this is about how prepared a nation is to defend its borders and secure its future.
The year was 1999. The Kargil War had broken out, and while Indian soldiers fought valiantly, one unsettling truth emerged—our military was reliant on foreign imports for crucial equipment.
Fast forward to 2023. India is now the fourth-largest military spender in the globally. Yet, 35% of its defence needs are still met through imports.
But something is different this time.
For the first time, India isn’t just looking to secure its own borders—it’s aiming to arm the world. With an ambitious goal of ₹50,000 crore in defence exports by 2028-29 and a clear push for self-reliance, India is undergoing a military revolution.
This is not just a policy shift—it’s a redefinition of India’s global military standing.
But how did we get here? And more importantly, where is this taking us?
A Defence Boom Decades in the Making*
History has shown us that innovation shapes the future of nations, not only in military technology but also in the financial markets.
In 2023, global military spending reached to $2.4 trillion, driven by economic growth and rising tensions worldwide.. The arms race is real, and India isn’t sitting this one out.
🔹 India’s total defence tech market? A whopping $138 billion opportunity over the next decade.
🔹 Electronics now make up 40% of modern warfare—a new $50–$60 billion segment.
🔹 From being an importer, India now dreams of exporting to the world.
If there was ever a turning point in India’s defence history—this is the moment
And it’s not just about warfare; it’s about a revolution that merges AI, robotics, and cybersecurity into India’s defence strategy.
Imagine Indian-made innovations driving global financial markets, AI-driven cyber defences stopping hacking attempts on military networks, and locally built warships securing the Indian Ocean.
That future isn’t a distant dream—it’s unfolding before us.
Revolutionizing India’s Armed Forces: From Air to Sea*
Picture this—An Air Force pilot, once flying a MiG-21, finally taking off in a state-of-the-art LCA Tejas. His old fighter jet, notorious for crashes, is gone.
That’s exactly the kind of transition happening today in every wing of India’s defence forces.
Indian Air Force: Out With the Old, In With the Future
- The Problem? India needs 42 squadrons of fighter jets but has only 30.
- The Solution? A new fleet of cutting-edge aircraft:
- LCA Tejas Mk1A – India’s first indigenous fighter jet.
- Advanced Medium Combat Aircraft (AMCA) – The stealth fighter of tomorrow.
- Drones & AI-powered combat UAVs – Eyes in the sky without risking lives.
Indian Navy: Dominating the High Seas
The Navy is expanding from 130+ operational ships to 170+.
Upcoming innovations include:
Smart torpedoes & Ballistic Missile Defence Systems.
New investment vehicles under construction, with better naval surveillance.
Future war: AI-powered ships that make their own tactical decisions.
Indian Army: From Legacy to Cutting-Edge
- Bulletproof jackets, advanced assault rifles, and long-range artillery are all in focus.
- Pinaka Multi-Barrel Rocket Launcher, hypersonic missiles, and Zorawar Light Tanks are set to redefine ground warfare.
Make no mistake—India is moving from traditional systems to to next-gen financial solutions at lightning speed.
Defence Index Performance
Source: Nifty indices, MOD, Data as on 31-Jan-25. The above graph is used to explain the concept and is for illustration purpose only and should not be used for development or implementation of an investment strategy. Performance results have many inherent limitations and no representation is being made that any investor will, or is likely to achieve. Past performance may or may not be sustained in the future.
The index has seen notable movement, primarily attributed to the change in the government policies aimed at promoting self-reliance and manufacturing within the country and also reduce the imports as India has been the 4 largest importers of arms and ammunition. The index has also delivered around 52.7% compounded annual growth rate (‘CAGR’) over a period of 5 years which reflects the strong growth of the companies in the defence sector.
The government continues to prioritize defence modernization and increased capital expenditure in the defence sector. In the Union Budget 2025-26, the Ministry of Defence (MoD) has been allocated ₹6.81 lakh crore, marking a 9.53% increase from the previous financial year. The Defence Research and Development Organisation (DRDO) has received a 12.41% hike in funding, with its budget rising to ₹26,816.82 crore from ₹23,855.61 crore in FY 2024-25. Of this, ₹14,923.82 crore is earmarked for capital expenditure and R&D projects.
Key Changes Made**:
To boost domestic manufacturing and technological advancements, a significant portion of the modernization budget has been allocated to domestic procurement. In FY 2025-26, ₹1,11,544.83 crore, or 75% of the modernization budget, is set aside for acquisitions from domestic sources, with ₹27,886.21 crore specifically allocated for procurement from private industries.
Additionally, the government is actively fostering the defence startup ecosystem to drive innovation and technological development. Under the iDEX scheme, including its sub-scheme Acing Development of Innovative Technologies with iDEX (ADITI), ₹449.62 crore has been allocated for funding new projects. This allocation has nearly tripled in two years, reflecting the government’s strong commitment to promoting indigenous defence innovation.
Defence Index Valuation
Source: Nifty indices, Data as on 31-Jan-25. The above graph is used to explain the concept and is for illustration purpose only and should not be used for development or implementation of an investment strategy. Performance results have many inherent limitations and no representation is being made that any investor will, or is likely to achieve. Past performance may or may not be sustained in the future.
The Nifty India Defence Index remained below its historical average for nearly two years before witnessing a sharp surge post-2024, driven by strong earnings growth expectations, a robust order book pipeline, and record-high defence exports. However, after July 2024, the index saw a steep correction and is now moving toward its historical P/E average of 37.07, currently trading at 49.44.
Conclusion
India’s defence transformation is no longer a vision—it’s a reality in motion. From strengthening indigenous manufacturing to advancing cutting-edge military technology, the nation is carving its place as a global defence leader. The momentum toward self-reliance and innovation is undeniable. With bold reforms, strategic investments, and a commitment to excellence, India is not just securing its future—it is shaping the future of global defence.
Source: Niftyindices, **MOD, *Complete Circle Capital report
Disclaimer: This article has been issued on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this document is for general purposes only and not a complete disclosure of every material fact. The Sector mentioned herein is for explaining the concept and shall not be construed as an investment advice to any party. The information / data herein alone is not sufficient and shouldn’t be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. All opinions, figures, estimates and data included in this article are as on date. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Readers shall be fully responsible/liable for any decision taken on the basis of this article.
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