An official representative announced on Monday that the government is studying the possibility of liberalizing rules for foreign direct investment (FDI) in the defense sector to further attract foreign investors.
Currently, the Department for Industrial Promotion and Internal Trade is consulting with stakeholders on this issue. An official source stated that some easing of existing regulations is being considered.
Under current policy, FDI up to 74 percent is permitted through an automatic route. Investments exceeding this threshold can be made upon receiving government approval if they are likely to provide access to modern technologies.
Furthermore, foreign investments in this industry are subject to security checks by the Ministry of Home Affairs and comply with the guidelines of the Ministry of Defence.
The government is taking several measures to stimulate production in the sector. India's defense budget has increased from 2.53 lakh crore in 2013-14 to 7.85 lakh crore in 2026-27. Exports in this area have grown from 686 crore in 2013-14 to 38,424 crore in 2025-26.
In 2025-26, the private sector accounted for 45.16 percent of defense exports, amounting to 17,353 crore, while state-owned defense enterprises contributed 21,071 crore, which is 54.84 percent.
By 2029, the government aims to achieve an annual defense production volume of 3 lakh crore and exports of 50,000 crore.