India tomorrow: After connectivity, comes security – India’s next frontier!

India’s defence sector is one of the most strategically significant and resource-intensive domains of national policy, backed by the world’s third-largest military in terms of personnel and ranked as the third-largest defence spender globally, with a defence budget of $75 billion for FY 2024–25 accounting for approximately 13% of total government expenditure. The country faces multifaceted security challenges along its western and northern borders, maritime vulnerabilities in the Indian Ocean Region (IOR), and evolving threats in the cyber and space domains. In response, India has been steadily ramping up defence modernization efforts, with a particular focus on indigenization under the “Aatmanirbhar Bharat” initiative. Over 75% of the capital procurement budget in FY25 has been earmarked for domestic industry, marking a significant shift from the historical reliance on foreign imports. Simultaneously, India has emerged as a net defence exporter, with defence exports reaching an all-time high of $2.7 billion in 2024–25, compared to $0.08 billion in 2014–15. This report explores the structural evolution of India’s defence architecture, the economic and strategic rationale driving policy shifts, the growing role of the private sector, and the challenges that lie ahead in achieving self-reliance and operational readiness in a rapidly shifting global security environment. The FDI maximum in defence manufacturing under the automatic route has been raised from 49% to 74% (for new investments requiring an industrial license), allowing foreign firms to establish manufacturing units with a greater degree of ownership and control.