India’s defence sector is emerging as a major investment opportunity, with defence production reaching INR 1.78 trillion in 2025-26. The government has progressively liberalised FDI, allowing up to 74% through the automatic route and higher investment with approval. Joint ventures remain central, particularly for technology transfer and manufacturing. The draft Defence Acquisition Procedure 2026 also shifts focus from technology licensing to Indian ownership of design documentation and source code. As India moves from being a defence importer to a designer, clearer FDI rules, indigenisation requirements and technology partnerships are expected to attract greater foreign participation.
Please click here to read the full article by Siddharth Manchanda, Partner, and Minhaz Lokhandwala, Partner, published in India Business Law Journal.
Minhaz is a private equity, venture capital and M&A lawyer with an experience of 16 years. He regularly advises clients on domestic and cross border transactions representing acquirers / investors, both financial and strategic and promoters. He has successfully led large and complex transactions for Indian and global corporations.