A profound geopolitical churn is fundamentally reshaping the global security architecture. This has led to re-strategising and positioning by nations to effectively safeguard their security environment and defence supply chains.
For example, Europe, responding to a radically changed security environment, has launched an unprecedented defence industrial push through the ‘Readiness 2030’ initiative, aiming to mobilise up to €800 billion in defence investments. Concurrently, the landmark EU-India Security and Defence Partnership (EISDP), signed in January 2026 on the sidelines of the EU-India FTA, has elevated our bilateral defence cooperation from a transactional engagement to a structural partnership.
Alongside bilateral trade agreements with multiple countries over the past three years, India has rapidly expanded its network of strategic partners, elevating several traditional relationships to “Comprehensive” or “Special” status around defence and security. Prominent among these are the United States (10-Year Defence Framework, October 2025), the UK (Defence Industrial Roadmap, 2025), Israel (Defence MoU, November 2025), France (Strategic Global Security Partnership, 2026), and Malaysia (Defence MoU, February 2026).
At the centre of this strategic convergence lies building upon the excellence attained by India’s private industry in the defence sector. As we stand at this inflection point, it is clear that private companies are no longer peripheral participants in the defence narrative; they are emerging as key drivers of a globally integrated industrial base.
India, long known as the world’s largest arms importer, has, thanks to a decade of sustained policy focus under ‘Aatmanirbhar Bharat’, begun to reverse that narrative. Private defence firms have moved from basic import substitution to demonstrating credible indigenous capabilities in high-technology domains. The recently conducted Operation Sindoor was a demonstrator of this transition.
The numbers reinforce this shift. India’s defence production reached Rs 1.54 lakh crore in FY 2024-25, marking a 232 per cent rise since 2014-15, with private defence firms posting an impressive 20 per cent CAGR in recent years. The record increase of the Defence Modernisation Budget for 2026-27 in the Indian Union Budget by 21.84 per cent demonstrates the government’s seriousness. Competitiveness today derives not merely from labour cost advantages, but from frugal engineering and innovation at scale. Indian engineering talent is actively innovating in critical dual-use domains such as artificial intelligence, cyber resilience, autonomous systems, and space security. From maritime domain awareness analytics to precision aerospace components, the private sector has proven itself a trusted and cost-effective partner for global OEMs. Earlier apprehensions regarding quality competitiveness and the ability of Indian firms to absorb advanced technologies are increasingly becoming irrelevant.
A common global trend is the pursuit of strategic autonomy while collaborating externally, particularly in defence. Joint Ventures (JVs) for co-development and local co-production are becoming the preferred pathway, supported by innovation and R&D models that incorporate foreground and background IP provisions. As partnerships mature, we are likely to see a proliferation of JVs between Indian and foreign defence firms setting up facilities both in India and abroad.
Establishing JVs with global, particularly European, defence primes could be a game-changer for India. The new European SAFE (Security Action for Europe) instrument, backed by €150 billion, and the EU Defence Fund (EDF) allow third countries with security partnerships like India to participate in common procurements. Member states’ commitments to raise defence spending toward 3.5 per cent of GDP from the current average of under 2 per cent further expand this opportunity.
The United States, with a $500 billion defence fund outlay for 2026–27, and increasing defence expenditure across ASEAN, African, and MENA regions, are also opening significant avenues for industrial collaboration.
During Prime Minister Narendra Modi’s 25–26 February visit to Israel, India and Israel agreed to enhance bilateral defence cooperation, including joint development and production of defence systems focused on transfer of technology for advanced systems such as Iron Dome, Iron Beam, and missile platforms, with an emphasis on co-development and innovation, opening new avenues for collaborative defence industries partnerships.
Through JVs, India can secure several strategic benefits. First, they enable deep technology transfer and shared IP ownership, as seen in the €6–7 billion partnership between France’s Safran and India’s DRDO 120-140 kN fighter jet engine project with 100 per cent technology transfer. Second, JVs can transform India into an export-oriented manufacturing hub; the Airbus–Tata C-295 transport aircraft project in Gujarat is evidence that European OEMs are willing to embrace “Make in India” arrangements. Third, by establishing JVs and subsidiaries, Indian firms can embed themselves into European defence value chains, securing long-term lifecycle support and diversifying beyond domestic demand cycles.
However, a collaboration framework is only as strong as its execution. To move from dialogue to delivery, both Government and Corporate India must act decisively.
Government of India: Looking ahead
- Fast-track the Security of Information Agreement (SoIA) and implementing arrangements with the EU and similar agreements with partner nations to enable classified data exchange and joint R&D.
- Support NATO-compliant testing infrastructure to assist MSMEs in integrating into allied supply chains.
- Align the Trade and Technology Council (TTC) with defence industry needs, particularly in supply chains and export controls.
- Facilitate EU–NATO standard certifications for Indian SMEs to reduce duplicative testing requirements.
- Advance bilateral defence partnership agreements with EU Member States.
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Corporate India: Looking ahead
- Invest in industrial security by launching EU Classified Information (EUCI) readiness programmes, including facility/personnel security clearances, and segregated IT networks.
- Execute 3–5 “Pathfinder” collaborative projects at restricted/unclassified level, for example, ammunition components, counter-drone systems, or MRO services, before scaling up.
- Adopt compliance frameworks assigning ownership for export-control, IP schedules, and supply assurance plans.
- Demonstrate robust IP protection, timely delivery, quality competitiveness, and transparent partnering norms through existing partnerships.
India’s private defence industry is no longer waiting in the wings. With scale, innovation, and strategic JVs, Indian industry can bridge emerging capacity gaps across Europe, MENA, and ASEAN geographies, contributing meaningfully to global security architectures. The political will is evident; it is now time for industry and government to work together to deliver.
Chandrajit Banerjee is the Director General of the Confederation of Indian Industry (CII). Views are personal.
(Edited by Theres Sudeep)