New Delhi: India's defence exports are on track to grow at a compound annual growth rate (CAGR) of 18% from FY24 to FY30, driven by the 'Make in India' initiative and a focus on local manufacturing.
A recent report from global investment firm Jefferies highlights that geopolitical tensions and the Indian government's push for indigenisation are creating expanding opportunities for Indian defence companies. The report also notes that the government is strengthening bilateral relationships to boost global export potential.
The report projects a 14% CAGR for the market opportunity available to Indian defence firms between FY24 and FY30. It emphasizes that while the Indian government is focusing on indigenisation, it is also encouraging defence equipment exports, which will increase order inflow in the sector.
India’s defence spending is expected to double between FY24 and FY30, potentially driving up the stock prices of defence companies. The Indian market will offer opportunities worth $90 billion to $100 billion over the next 5 to 6 years. In 2022, India’s defence expenditure was 10% of that of the US and 27% of China's expenditure.
As the world’s second-largest importer of defence equipment, India accounts for 9% of global arms imports. Defence exports have surged 14-fold to $2.6 billion between FY 2017 and FY 2024, encompassing missiles, radars, naval systems, helicopters, and surveillance equipment.
Recently, the Centre approved 10 capital acquisition proposals worth Rs 1,44,716 crore, significantly boosting local defence manufacturing. The Defence Acquisition Council (DAC), led by Defence Minister Rajnath Singh, granted Acceptance of Necessity (AoN) for these proposals. Remarkably, 99% of the funding is allocated to indigenous sources under the ‘Buy (Indian)’ and ‘Buy (Indian-indigenously designed, developed and manufactured)’ categories. This approval paves the way for procuring future-ready combat vehicles, air defence radars, Dornier-228 aircraft, and next-generation patrol vessels.
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