Updated on September 16, 2025 01:18:50 PM
To propel the potential of what we Indians can manifest, the defense manufacturing sector is the only hub where people can feel safe and secure within the military's protective shield against periods of high alertness. This sector builds the framework for selfless national security to promote prevention against intense aggression from outside the country's borders and to help the society with the sense to restore balance in harmony. The defense industry's main focus is on hosting self-reliance markings on R&D centers.
The current value in production has made a good record US$1.068 trillion in the year 2022-23. Furthermore, the FDI equity inflow stood at US$ 15.82 million, according to the DPIIT data realization between the year 2000-2023.
The market for aerospace and defence industries has been divided into 3 major sectors— military fixed wings, naval vessels and surface combatants, and missile and missile defence systems with a view to meet demand for leading territorial integrity against the providence disputes and disputes with rival countries.
This industry has stood on the edge of competition where weapons production and exporting industry has constantly work on to reduce its dependence on various countries like USA and Japan
With the surging income of capitals and investment opportunities, 194 defense startups house Innovative Tech Solutions has been set up to network an entrepreneurial generation in the defense sector.
The outsmart defense production in India has risen above US$ 1.75 cr. along with the elevation in exports worth ₹ 35000 cr., increased by 10% over the last year.
To participate in FDI in the defense manufacturing sector, applicants are required to register under the Foreign Investment Facilitation Portal (FIFP). The procedure can be puzzling for any newcomer applicant since it incorporates several terms and conditions without rendering direct access to portals that can generate approvals for FDI.
Table of Content
The objectives of FDI in defense manufacturing sector is listed below:
Following are the components permitted under Defense manufacturing sector
NOTE: As FDI limit has been improved from 49% to 74% under automatic route since FY 2016 and get 100% permission after passing through government approval.
Many documents are required for FDI in Defense manufacturing which are as follows:
Following are the procedures which required at the time of FDI in the AYUSH sector:
Applicants must fill out the online application form along with the relevant documents for making out the proposal for Foreign Direct Investment
Filing the proposal for FDI online within two working days, DIPP then will address the concerned administrative ministry to transfer the proposal of applicants electronically.
Collect all the requisite documents for continuing the process of the investment proposal. In case documents may be found incorrect, applicants will be held responsible in case of any deviation found.
The DIPP along with potential authorities will process the application internally and recognize various ministries for adding several comments such as the Ministry of Home Affairs, Reserve Bank of India, Ministry of External Affairs, Ministry Of Finances, etc.
There are conditions tapping for the procedure of FDI approval which must be understood by investors.
There are numerous significant advantages for investors that compel them to invest in FDI in India's defense manufacturing sector:
The benefits of FDI in defense manufacturing sector are as follows:
Conclusion
Foreign direct investment in defense manufacturing is the world's fourth largest military industry, after the United Nations and Japan. This sector improves prepositioned concern for national security in the global defense market. To strengthen the condition of heavy industry, the government is constantly looking forward to revising its policy. Therefore, raising concern over defense-related technologies, which include several components such as aircraft, naval vessels, firearms, missiles, and fighter jets, FDI in defense manufacturing is often encouraged to foster quality input in raising the country's GDP through the defense industry.
Several other factors to consider for investors while investing in heavy industries are listed below:
Investors must also need to check eligibility criteria for buying investment in India in sectoral companies.
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Frequently Asked Questions
The market cap of the defense industry is combined with $794.95 billion, with the total 73 defense stocks.
Yes, FDI is allowed in Defense Production. The FDI limit is increased from 49% to 74% under automatic route and gets 100% permits through government approval after clearance.
According to the Standing Committee report, the national defense policy of India defines the national security policy as the national policy which compasses and encapsulates the nation's strength, thus extending critical point security.
To invest in the defense sector, applicants must focus on the primary option, i.e., to directly create investment in the listed defense stock companies.
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