Beyond Missiles: Why air defence could become India’s next defence-manufacturing megatrend

Why One Missile Is No Longer Enough

Air defence was once associated primarily with stopping combat aircraft, helicopters and ballistic missiles. Those threats remain, but they have been joined by small drones, loitering munitions, cruise missiles, decoys and larger one-way attack drones that can be launched in coordinated waves.

These threats differ greatly in size, speed, flight profile and cost. A radar designed to track a fast-moving aircraft may struggle to detect a small quadcopter flying close to the ground. Firing a sophisticated long-range interceptor at an inexpensive drone may destroy the target but still impose an unfavourable cost exchange on the defender.

No single weapon can address this entire spectrum efficiently. Long-range systems must protect wider areas and engage high-value threats, while medium- and short-range systems defend military formations, airfields and strategic installations. Closer to the target, very-short-range missiles, guns and electronic warfare systems provide additional layers.

Behind them sits the less visible part of the architecture: the radars, sensors, communications links and command systems that identify each threat and assign the most appropriate response. The interceptor at the end of the chain is only as effective as the network guiding it.

Where the Procurement Pipeline Is Taking Shape

There is no official consolidated estimate for the size of India’s future air-defence market. Broader defence allocations cannot simply be counted as air-defence spending. Even so, recent budgets and acquisition approvals show that large indigenous programmes are receiving greater financial and policy support.

An AoN is the in-principle administrative approval of a proposed acquisition. It is not a purchase order, signed contract or guarantee of revenue. Between initial approval and operational deployment lie several stages, including procurement procedures, trials, commercial negotiations, contracting, production and delivery.

Air defence nevertheless represents a visible part of the prospective pipeline. In July 2026, the Defence Acquisition Council granted AoN to proposals estimated at about ₹52,000 crore. The wider group included the Akash Tarang anti-unmanned aerial vehicle electronic warfare system, the Medium-Range Surface-to-Air Missile (MRSAM) weapon system and the Very Short Range Air Defence System (VSHORADS) for the Army. Individual programme values were not disclosed, and the approvals do not yet constitute signed contracts.

The wider pipeline extends from operational Akash systems and Akashteer to the Quick Reaction Surface-to-Air Missile (QRSAM), VSHORADS, counter-drone equipment, surveillance and fire-control radars, the developmental Integrated Air Defence Weapon System (IADWS) and Kusha.

These programmes sit at different points on the acquisition ladder. A successful trial demonstrates technological progress; an AoN establishes an approved requirement; a signed contract creates an executable order for industry; and induction places the capability in operational service.

The Public-Sector Backbone

India’s air-defence industrial base remains anchored in the public sector. DRDO leads much of the system design and technology development. Bharat Electronics Limited (BEL) occupies a central position in radars, communications, electronic warfare, electro-optical equipment and command-and-control systems. Bharat Dynamics Limited (BDL), meanwhile, serves as a principal production agency for several guided-missile programmes.

The scale of air-defence-specific contracts awarded to these companies is more revealing than their broader corporate order books. In March 2023, the MoD signed a contract worth over ₹8,160 crore with BDL for the improved Akash weapon system for the Army’s third and fourth Air Defence regiments. The order covered missiles and launchers with upgrades, ground-support equipment, vehicles and associated infrastructure.

In the same month, the MoD signed a ₹2,841 crore contract with BEL to manufacture Medium Power Radars (Arudhra) for the IAF. Developed by DRDO, the radar is designed to detect and track aerial targets and incorporates an identification-friend-or-foe capability.

Akashteer illustrates how the less visible command layer can itself become a substantial industrial programme. In March 2023, the MoD signed a ₹1,982 crore contract with BEL for an Automated Air Defence Control and Reporting System under Project Akashteer.

The system is designed to monitor low-level airspace and coordinate ground-based air-defence weapons. The government said the programme would also generate business for Indian electronics companies and micro, small and medium enterprises supplying BEL.

These contracts show that value lies not only in missiles and launchers, but also in the sensors and networks that connect them. State-owned companies are likely to remain the principal system designers and integrators. Deeper indigenisation, however, will depend on sustained orders flowing to specialised private companies and smaller suppliers that manufacture the underlying components.

Where Private Industry Can Capture Value

Much of the private-sector opportunity is likely to lie below the level of the complete weapon system. Modern air-defence programmes depend on specialised electronics, including radio-frequency and microwave components, antennas, transmit-receive modules, electro-optical sensors, guidance equipment and secure data links. They also require power supplies, batteries, composite structures, missile airframes, propellants, explosives, launchers, support vehicles, test equipment and simulation systems.

Many of these technologies are not limited to one platform. Advanced radar electronics, for example, can find applications across ground-based air defence, naval surveillance, combat aircraft and electronic warfare systems. A company producing composite structures, precision components or propulsion materials may be able to supply several guided-weapon families.

This is where the wider industrial multiplier begins to emerge. The value of an indigenous programme is not determined solely by where the final system is assembled. It also depends on whether the programme creates recurring orders for domestic suppliers and enables those companies to develop technologies that can be applied across the defence and aerospace sectors.

The risk is that India could localise the visible architecture of a system—its launcher, radar or final assembly—while retaining foreign dependence at critical points in the supply chain. Domestic assembly and manufacturing do not necessarily amount to domestic control over the underlying technology.

The next phase of indigenisation must therefore move deeper into areas such as advanced seekers, radio-frequency electronics, infrared detectors, guidance and navigation systems, specialised semiconductors, propulsion technologies and sensor-fusion software. The real test will be whether major programmes create technological depth throughout the supply chain rather than only at the level of the prime contractor.

The Recurring Economics of Air Defence

Air-defence spending does not end when a missile battery, radar or command system is delivered. Missiles are consumed during combat and training, while many components have defined service lives and may eventually require replacement or recertification. Radars, launchers, power units and communications equipment need regular maintenance. Software, target databases and electronic-threat libraries must also be updated as adversaries introduce new weapons, flight profiles and methods of electronic attack.

BEL’s ₹593.22 crore contract with the IAF to provide maintenance services for the Akash missile system illustrates the business that follows the original acquisition.

As India adds further layers to its air-defence network, this lifecycle market is likely to expand. Akash variants, counter-drone systems, QRSAM and developmental programmes such as Kusha will require spares, repairs, upgrades, testing, recertification and replacement stocks over several decades.

Interceptor replenishment could become particularly important. A launcher or radar may remain in service for years, but every missile fired reduces the available stock. Maintaining adequate stocks for training and war reserves requires production to continue after the initial batteries have been delivered.

This changes the commercial character of the sector. Air defence becomes less like the occasional purchase of a high-profile platform and more like a continuing industrial requirement sustained by maintenance, modernisation and repeated replenishment.

Procurement Will Determine the Market’s Scale

Higher budgets can create the conditions for a large air-defence market. Whether that expenditure produces lasting industrial capacity will depend on how procurement is structured.

Manufacturers need visibility over future orders, stable requirements and production volumes large enough to justify investment. Missile, radar and sensor programmes also require access to testing infrastructure, timely certification and a clear route from successful development to contracted acquisition. Smaller suppliers, in particular, need confidence that a component developed for one production batch will not be replaced by an imported alternative in the next.

The armed forces must also identify where requirements can be standardised. The Army, Navy and Air Force operate in different environments and will continue to need service-specific capabilities. Even so, unnecessary duplication in sensors, data links and command interfaces can fragment production, raise costs and make systems more difficult to integrate.

Open architectures and common data standards could make it easier to add new radars, weapons and electronic systems without redesigning the wider network. They could also create more space for private companies to compete at the subsystem level rather than remain confined to build-to-print manufacturing.

Procurement planning must also account for replenishment. Ordering a limited stock of missiles with each launcher may satisfy the initial contract but leave production lines without continuity after the first batch is delivered. Multi-year orders for interceptors, spares, maintenance and upgrades would give manufacturers greater confidence to expand capacity, invest in specialised facilities and localise more of the supply chain.

The eventual size of India’s air-defence market will therefore be determined not only by the capabilities the armed forces require, but by how consistently those requirements are converted into contracts, production schedules and repeat orders.

Beyond Military Bases

The potential market for counter-drone and selected air-defence systems could eventually extend beyond the armed forces. Airports, refineries, nuclear installations, ports, power plants, space facilities, defence factories, government complexes, data centres and semiconductor plants are all plausible targets for hostile or unauthorised drones. Their protection could create demand for a distinct civilian and critical-infrastructure counter-drone market.

Protecting civilian sites will not usually involve deploying conventional missile batteries in densely populated areas. Demand is more likely to centre on surveillance radars, electro-optical sensors, identification software, electronic jammers, other non-kinetic countermeasures and tightly controlled short-range interception systems.

This prospective market is less clearly defined than military procurement. Responsibility is spread across ministries, security agencies, infrastructure operators and local authorities. Jamming raises spectrum-management concerns, while kinetic interception in civilian areas creates legal, safety and operational risks.

Even so, the spread of low-cost drones is likely to make counter-drone protection a more regular part of critical-infrastructure planning rather than a specialist capability limited to military installations.

From Missile Purchases to Industrial Strategy

India already possesses many of the foundations of a substantial air-defence industrial base. These include indigenous missile programmes, major public-sector integrators, operational command networks, expanding radar capabilities and a capital-acquisition framework that reserves a significant share of spending for domestic industry.

There is no publicly documented estimate of the cost of a fully integrated national air-defence architecture, nor a verified market figure capturing the combined value of the programmes required to build and sustain one.

The case for a major long-term market therefore rests on the breadth and persistence of the requirement. Air defence now extends from long-range interceptors to compact counter-drone systems, from radars and electronic warfare to software and secure communications, and from initial acquisition to decades of maintenance, upgrades and missile replenishment.

The industrial opportunity will be realised only if headline programmes create technological depth further down the supply chain. That will require predictable orders, sustained production runs, greater private-sector participation and domestic control over the critical components that determine system performance.

India’s next air-defence challenge will not be solved by acquiring one more advanced missile system. It will depend on whether the country can manufacture, integrate and continuously replenish an entire defensive architecture.

Over the coming decade, the real measure of progress will be whether Indian manufacturers can produce critical components at scale, sustain production lines and maintain adequate inventories over the long term. If India can build that industrial depth, air defence could move from a sequence of individual procurements to one of the country’s most consequential long-term defence-manufacturing markets.

Aritra Banerjee is a senior journalist with the Financial Express specialising in the intersection of defence, space, emerging technologies, industrial policy and the global energy transition. His work explores how technological innovation, strategic industries and geopolitics are reshaping national security and economic competitiveness in the twenty-first century.

Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.

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