Indian aerospace and defence sector - From import dependence to export powerhouse
How India is accelerating towards export competitiveness, technological ownership, and strategic autonomy.
Overview
India’s defence industry is entering a decisive phase. Sustained policy reforms, rising budgets, maturing supply chains, and a vibrant innovation ecosystem are reshaping the sector.
India’s defence budget for FY 2026-2027 touched an all-time high at US$88 billion , which shows a significant increase of 15.2 percent over FY 2025–2026.
Furthermore, budget 2026 plans a significant increased outlay towards capital expenditure (21.8 percent over previous year) and Research and Development (R&D) (8.50 percent over previous year), that reinforces the vision to drive the theme of self-reliance and support for the entire defence ecosystem from manufacturing to AI, quantum computing, data centres and the space sector.
Against this background, Deloitte has developed a thought paper to examine the evolution of India’s defence and aerospace ecosystem from a policy lens, assess how technological shifts are reshaping war-fighting concepts, and analyse the sector’s growing attractiveness for investors.
This thought paper maps the investment landscape in the defence sector, highlights where capital is flowing (UAVs, space, electronics, components, MRO) and outlines the capabilities India must build to convert momentum into durable export leadership.
