Telangana defence MSMEs grow fivefold as industry seeks stronger policy support
HYDERABAD: Telangana’s defence and aerospace ecosystem has expanded from around 400 micro, small and medium enterprises (MSMEs) in 2016 to nearly 1,500–2,000, with industry leaders and government officials calling for stronger policy support, better infrastructure and greater participation by smaller manufacturers to help India emerge as a global defence production hub.
The issue was discussed at the second Defence MSME Manufacturers Forum organised by the Indian Chamber of Commerce (ICC) under the theme “Make in India for the World: Empower MSMEs for India’s Defence & Aerospace Future.”
Telangana highlights rapid expansion of defence ecosystem
Praveen P.A., director of Telangana’s aerospace and defence unit, said the state focused on building an ecosystem rather than waiting for domestic defence orders.
“When we started, we counted around 400 MSMEs. Today, 1,500 to 2,000 MSMEs are actively participating,” he said.
Praveen said Telangana had attracted investments from global aerospace companies including Lockheed Martin, Boeing, GE Aerospace, Airbus, Pratt & Whitney and Safran.
Safran alone has invested about ₹2,500 crore in Hyderabad over the past six years and generated nearly 2,000 jobs, he added.
Defence output rises, but exports remain modest
Commodore P.R. Hari (Retd.), chairman and managing director of Garden Reach Shipbuilders & Engineers Ltd and chairman of ICC’s National Expert Committee on Defence, Aerospace and Space, said India’s defence production increased from ₹46,429 crore in 2014-15 to ₹1.78 lakh crore in 2025-26.
Defence exports rose from ₹1,941 crore to ₹38,424 crore during the same period.
“These numbers are encouraging, but India still contributes only 0.3 to 0.4 per cent of the global defence export market,” Hari said, adding that the country continued to remain among the world’s largest defence importers.
Vishnu Malpani, executive director of Azad Engineering, said India should move beyond being viewed as a low-cost manufacturing destination.
“Why is India still seen in so many rooms as a place to find labour arbitrage, when India is home to some of the finest engineering talent in the world?” he asked.
He said aerospace and defence reflected a country’s engineering capability and technological self-reliance.
State plans dedicated aerospace and defence parks
Krishna Aditya, Special Secretary, Industries and Commerce, said the Telangana government was identifying dedicated aerospace, defence and space industrial parks with common testing facilities.
He urged MSMEs facing issues related to land, infrastructure or incentives to approach the government.
“Our intent is to facilitate support to the maximum possible industry players,” he said.
Nikhil Chakravarthy J., director, industries and commerce, said Telangana’s network of Defence Research and Development Organisation laboratories, defence public sector undertakings and global manufacturers had helped create one of India’s strongest aerospace ecosystems.
He said around 1,500-1,700 MSMEs now supported the sector and urged companies to utilise schemes such as iDEX, Aditi, T-Works and state incentives to develop new products.
ICC report flags challenges for defence MSMEs
The Indian Chamber of Commerce also released its report, “MSMEs – A Force Multiplier for India’s Defence Ecosystem, Edition 2,” which said India’s defence manufacturing had expanded rapidly over the past decade but sustained growth would depend on stronger support for MSMEs.
The report noted that India’s defence exports reached ₹38,424 crore, nearly 30 times higher than in 2014-15, with products now exported to more than 80 countries. However, India’s share in the global defence export market remains only 0.3-0.4 per cent.
The report identified slow procurement processes, inadequate testing and certification infrastructure, limited access to finance, delayed payments and difficulties in scaling innovations from prototype to commercial production as major challenges.
It also said India continued to depend on imports for several critical technologies and called for sustained investment in indigenous research, subsystem development and intellectual property.
The ICC recommended expanding common testing and certification facilities, creating dedicated financing and specialised export finance for defence MSMEs and start-ups, simplifying procurement procedures, integrating MSMEs into global supply chains and establishing export-oriented manufacturing clusters.
According to the report, drones, loitering munitions, missiles, radars, electronic warfare systems, counter-drone technologies, secure communications, cyber security and advanced materials present significant opportunities for India’s defence manufacturing sector.
