India Combat Vehicle Systems Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

India Combat Vehicle Systems Market Trends and Insights

Rising Defense Budgets Driving Armored Fleet Modernization

The FY 2025-26 capital allocation of INR 1.80 lakh crore (USD 21.62 billion) reserves 75% for domestic procurement, guaranteeing predictable funding lines for master programs such as the 1,770-unit Future Ready Combat Vehicle (FRCV) and the roughly 1,750-unit Future Infantry Combat Vehicle (FICV). Acceptance-of-Necessity (AoN) approvals ensure multi-year contracting; however, the pivot from imports to indigenous design adds qualifying trials and manufacturing readiness reviews, thereby stretching delivery schedules. Phased induction of 590 FRCVs in the first tranche mitigates production risk but tempers near-term volumes. In parallel, life-extension packages for frontline T-72 and T-90 formations absorb a sizeable share of modernization funds, balancing readiness with new-build ambition.

Indigenous Manufacturing and Localization Mandates in Defense Procurement

The Defence Acquisition Procedure 2020 reserves 68% of capital outlays for Indian-IDDM and Make categories. Saab’s 100% FDI-backed Carl-Gustaf plant, launched in March 2024, demonstrates that design intellectual property is integral to assembly work.^{[1]Saab Group, “Carl-Gustaf Manufacturing in India,” saab.com} Positive Indigenisation Lists released in 2024 included fire-control computers and active-protection radars, prompting integrators to consider domestic options such as Tonbo Imaging’s Elpeos, which meets 6-kilometer laser-ranging needs at 40% lower cost than imported systems.^{[2]Tonbo Imaging, “Elpeos Fire Control System,” tonboimaging.com} Offset credits worth INR 12,000 crore (USD 1.34 billion) are set to expire between 2025 and 2027; foreign primes have begun channeling them into electric-drive research tie-ups with Indian Institutes of Technology (IITs), hedging against potential tighter future localization rules.

Flagship Combat Vehicle Procurement and Upgrade Programs

The 1,750-unit Future Infantry Combat Vehicle (FICV) program entered the Expression of Interest stage in April 2025, requiring amphibious capability and the ability to operate at altitudes of up to 5,000 m. The Zorawar light tank completed its trials in Ladakh in September 2024 and secured a 350-unit order, with deliveries scheduled to begin in 2027. Meanwhile, 693 BMP-2s are being upgraded with Nag anti-tank missiles and digital fire-control suites, extending service life by another 15 years. The Future Ready Combat Vehicle (FRCV) tender for 590 units is currently under technical evaluation, with domestic primes partnering with Korean and Russian design houses in competing bids.

Upgrade and Life-Extension Cycles for Legacy Armored Platforms

Budget discipline steers the Army toward refurbishment. Bharat Electronics is retrofitting 957 T-90s with third-generation commander sights under an INR 1,075 crore (USD 0.12 billion) contract. The BMP-2M program incorporates explosive reactive armor and digital fire control, enhancing survivability while incurring one-third of the cost of new-build alternatives. Heavy recovery vehicles ordered from Bharat Earth Movers in December 2024 ensure disabled tanks can be retrieved in contested zones, a gap highlighted by the 2020 Ladakh incident.

Procurement Delays and Cost Overruns in Major Vehicle Programs

The Arjun main battle tank’s 50-year gestation saw real per-unit costs climb 340%.^{[3]Comptroller and Auditor General of India, “Performance Audit of Arjun Main Battle Tank Program,” cag.gov.in} FICV contracting has slipped past 2026 after three revisions, leaving 32-year-old BMP-2s awaiting replacements. Multi-layer approvals by the Defence Acquisition Council and the Directorate General of Quality Assurance routinely add 18-24 months to the timeline beyond international norms. FRCV overshot the budget by 23% in 2024; as a result, specifications had to be renegotiated, delaying induction by two more years.

Exposure of Armored Platforms to Loitering Munition Threats

Ukraine’s experience showed loitering munitions destroying 38% more armored vehicles than guided missiles, a trend that forced the Indian Army to seek 360-degree active protection in January 2024. Rafael’s Trophy system offers a 95% intercept success rate but costs very high per vehicle, exceeding the legacy T-72 electronics budgets. DRDO’s AMAP-ADS soft-kill suite cuts targeting accuracy by 70% but will not field hard-kill interceptors before 2027. Doctrinal updates require electronic warfare payloads on all vehicles within 40 kilometers of the Line of Actual Control, adding INR 2.8 crore (USD 28 million) per platform and stressing already thin capital accounts.

Segment Analysis

By Vehicle Type: Infantry Fighting Vehicles Gain on Doctrine Shifts

Infantry Fighting Vehicles (IFVs) are expected to post a 4.87% CAGR during the forecast period, outpacing growth in Main Battle Tanks (MBTs), despite tanks holding 41.89% of India's combat vehicle systems market share in 2025. The India combat vehicle systems market size for tracked troop carriers is expanding as the Army demands amphibious, high-altitude platforms capable of quick-change mission modules. The FICV's 1,750-unit pipeline anchors this momentum and bundles decades-long sustainment revenue. Tank fleets, by contrast, focus on electronics upgrades such as Bharat Electronics' commander-sight retrofit for 957 T-90s.^{[4]Bharat Electronics Limited, “Contract Awards,” bel-india.in}

Secondary platforms follow similar logic. Armoured Personnel Carriers receive remote weapon stations and mine-resistant hulls, while Engineering and Maintenance Vehicles attracted fresh orders for heavy recovery trucks essential in high-altitude contingencies. The Ministry of Defence (MoD) directs that 15% of any large platform contract cover niche derivatives, thereby guaranteeing demand for bridge layers and command variants. Tonbo Imaging's Elpeos system demonstrates that indigenous sensors can now replace imports without compromising performance. 

Note: Segment shares of all individual segments available upon report purchase

By System: Sensors and Displays Outpace Hull Fabrication

Sensing and display subsystems are projected to expand at a 5.41% CAGR, the fastest among system categories. India's combat vehicle systems market size for sensors is expected to grow on the back of BEL’s program, and commander sight retrofits, both of which deliver immediate lethality gains without the need for protracted hull assembly. Weapon systems retain a 32.45% anchor share, yet their growth rate softens as legacy gun calibers persist across life-extended fleets.

Hybrid power-distribution modules integral to DRDO’s IAVS open a novel profit pool, while Electrical Wiring and Interconnection Systems (EWIS) scale with node counts that triple in AI-driven vetronic architectures. Active protection, counter-UAS, and loitering-munition launchers fall within the others category, and Army RFIs in 2024-25 signal an accelerated procurement path, likely to lift this niche above a single-digit share by 2031.

By Weight Class: Light Platforms Accelerate for High-Altitude Agility

Light vehicles are set to expand at a 7.14% CAGR, powered by the Zorawar light tank’s 350-unit order tailored for 5,000 m operating altitudes. Heavy platforms still occupy 57.45% of the volume, but future budgets prioritize upgrades over new hull production. The India combat vehicle systems market size for light platforms benefits from air-transportability, higher power-to-weight ratios, and lower logistical footprint. Medium platforms, such as the FICV, which weighs 35 to 45 tons, strike a balance between amphibious capability and survivability.

The Infantry Protected Mobility Vehicle (IPMV) 8x8 illustrates the shift: an 18-ton platform delivering 33 horsepower per ton and a road speed of 80 km/h entered service in 2024. Tata’s WhAP 8x8 extends modularity further, allowing for the swapping of mission bays in under four hours. The FRCV’s 55-ton envelope seeks a compromise, powerful yet rail-portable, underscoring how weight considerations now shape design as much as firepower. 

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

Northern Command received 34% of new vehicle deliveries in 2025, stocking Ladakh with Zorawar light tanks and IPMVs, which operate in thin air and require derated legacy diesel engines. Western Command concentrates on MBTs and K9 Vajra-T howitzers for desert operations; Larsen & Toubro’s December 2024 artillery award places most units in Rajasthan sectors. Eastern Command, facing jungles and rivers, drives demand for amphibious FICVs that can ford 1.5 m without special preparation.

Manufacturing clusters in Tamil Nadu, Gujarat, and Maharashtra account for 68% of production value. L&T’s Talegaon campus co-locates fabrication, assembly, and test tracks on 250 acres, cutting logistics costs by 12%. Bharat Electronics leverages Pune and Bangalore ecosystems for algorithm co-development and integration trials. Armoured Vehicles Nigam Limited upgraded its Avadi line in 2024 to handle BMP-2M retrofits, adding a 1,200 m test track.

The Directorate General of Quality Assurance operates 41 field offices that enforce MIL-STD-1553B across a range of temperature extremes, from minus 40 °C in Leh to 55 °C in Jaisalmer, creating a certification gauntlet that some foreign suppliers label a barrier, yet one that domestic firms cite to justify premium pricing. Export traction remains limited; Bharat Forge shipped 12 armored vehicles to Southeast Asia in 2024, but India lacks recent combat-proven credentials, dampening competitiveness against Israeli or Turkish peers.