Nearly 17,000 MSMEs Power India’s Expanding Defence Manufacturing Ecosystem

India’s defence manufacturing network now includes nearly 17,000 micro, small and medium enterprises, reflecting the widening participation of domestic industry in the country’s drive for military self-reliance.

Minister of State for Defence Sanjay Seth highlighted the contribution of MSMEs, start-ups and private companies in developing indigenous defence equipment, components and technologies. These enterprises increasingly support major defence manufacturers and public-sector undertakings by supplying precision components, electronics, materials, software, subsystems and maintenance services.

The growing industrial participation was highlighted alongside the Indian Air Force–Society of Indian Defence Manufacturers User–Industry Interactive Workshop held at the IAF Auditorium in Subroto Park, New Delhi, on July 30, 2026. The programme focused on maintenance, repair and overhaul, logistics and the indigenisation of components used in aircraft, aero-engines and ground-support equipment. It was intended to enable direct engagement between IAF maintenance authorities and Indian manufacturers capable of addressing operational requirements.

The workshop also provided companies with greater visibility regarding the Air Force’s requirements for aircraft components, accessories, repair technologies, test equipment and lifecycle support. Developing these capabilities within India can reduce dependence on overseas suppliers, shorten repair cycles and improve the availability of military aircraft during emergencies.

According to an official government backgrounder, India’s defence industrial ecosystem currently comprises 16 Defence Public Sector Undertakings, around 500 licensed defence companies and nearly 17,000 MSMEs. The number of defence industrial licences has increased from 258 in 2015 to 834 as of March 2026, indicating substantially greater private-sector participation.

India’s indigenous defence production reached a record ₹1.78 lakh crore during 2025–26, while defence exports rose to ₹38,424 crore and reached more than 80 countries. Nearly 65 per cent of the country’s defence equipment is now produced domestically, compared with the earlier situation in which India depended on imports for approximately 65–70 per cent of its requirements.

MSMEs are particularly important because they expand the domestic supplier base and allow specialised companies to contribute technologies such as sensors, avionics, unmanned systems, artificial intelligence, advanced materials and precision-engineered components. Programmes such as iDEX, the Technology Development Fund, Positive Indigenisation Lists and the SRIJAN portal are helping emerging companies move from prototype development towards procurement and production.

The expansion of this ecosystem represents a structural change in Indian defence manufacturing. Instead of depending predominantly on imported platforms and components, the country is building a distributed industrial network capable of designing, manufacturing, repairing and supporting defence systems throughout their operational life.