Opening DRDO Missile Production to Private Industry in India

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Key takeaways

India's domestic defence production reached ₹1.78 lakh crore in 2025-26, with private companies contributing 24% and state-run DPSUs producing the remaining 76%.
Defence exports grew to ₹38,424 crore across more than 80 countries, with the Ministry targeting ₹50,000 crore in exports by 2029-30.
The Ministry of Defence approved private production of major conventional missile systems like Akash, Astra, Pralay, Nag, and Rudram while retaining strategic nuclear systems.
Indian private defence companies face high capital costs with borrowing rates of 8-11%, compared to 3-5% accessible to Western and Chinese rivals.

The Ministry of Defence approved the transfer of DRDO missile technologies for conventional weapons to private domestic companies.
This policy covers systems such as Akash, Astra, Pralay, Nag, and Rudram, while keeping strategic nuclear missiles under exclusive government control.
Transferring these manufacturing capabilities breaks government monopolies, though true strategic autonomy needs private funding in high-risk military research.

India's domestic defence production reached ₹1.78 lakh crore in 2025-26, rising from ₹46,500 crore in 2014-15.
Defence exports expanded to ₹38,424 crore across more than 80 countries during the same period.
The government targets domestic defence production of ₹3,00,000 crore and exports worth ₹50,000 crore by 2029-30.
Private companies currently manufacture 24% of domestic defence equipment, while Defence Public Sector Undertakings like BDL produce the remaining 76%.

Recent conflicts in Ukraine and West Asia show that modern wars consume precision missiles at high speed, requiring private firms to boost production capacity.
Concentrating missile manufacturing in state units like BDL facilities in Telangana creates single targets, while regional private assembly lines offer better protection.
Faster production schedules ensure that the Indian Army, Navy, and Air Force receive weapon refills quickly during emergencies.
Top private weapon assemblers generate business for hundreds of smaller MSME suppliers that make micro-electronics, composite bodies, and precision actuators.
Proven conventional missiles like Akash and Astra have high export potential in Southeast Asia, Africa, and the Middle East through private joint ventures.
Competition among private manufacturers reduces the per-unit purchasing cost of missiles for the military compared to state-run production models.
Transferring established weapon production frees DRDO scientists to focus on advanced tech like hypersonic vehicles, directed-energy weapons, and quantum navigation.
Allowing private access to DRDO testing facilities lowers entry costs for new domestic aerospace companies.

Transfer of Technology treats private firms as simple factory assemblers rather than creative innovators who own core intellectual property.
Major Indian corporate groups hesitate to spend high-risk capital on military research, unlike US defense giants that spend billions on original design.
Long procurement delays under the Defence Acquisition Procedure (DAP) leave private capital idle without guaranteed multi-year order commitments.
Indian private firms pay high interest rates of 8-11% on loans, compared to 3-5% paid by Western and Chinese rivals.
State-owned DPSUs receive preference through nominated orders and cheap government funding, creating an uneven playing field for private competitors.

India should move toward joint development where private companies invest 30-50% of research capital in exchange for shared intellectual property.
Parliament should set up a statutory non-lapsable defence fund to give private investors confidence through guaranteed long-term procurement.
The government needs to bring back weighted tax deductions of up to 200% on corporate spending in military research and development.
Expanding the Defence Testing Infrastructure Scheme (DTIS) will let private companies test new weapons independently without waiting for state facilities.
The MoD should scale up schemes like iDEX and the Technology Development Fund (TDF) to support large corporate projects instead of small component startups alone.

Opening conventional missile production to private manufacturers removes major supply bottlenecks and expands industrial capacity across the country.
Achieving real self-reliance under Aatmanirbhar Bharat requires private corporations to invest heavy capital into fundamental research rather than remaining simple assembly lines.