India’s Defence Sector Poised For Growth With USD 138 Billion Opportunity

India’s defence sector is poised to witness a significant ordering opportunity of USD 138 billion over the period FY24-32, driven by rising demand for defence equipment, technologies, and services. A report titled ‘India Defence’ by Nomura highlights the lucrative prospects for companies engaged in defence production and technology development.

The report predicts that India’s defence capital expenditure will increase to 37 per cent of the total budget by FY30, a substantial rise from the projected 29 per cent in FY25. This translates to a cumulative capital outlay of Rs 15.5 trillion over FY24-30, indicating considerable growth compared to previous periods.

According to the report, the Indian government is actively supporting the defence sector through policy reforms, incentives, and initiatives aimed at promoting indigenous manufacturing and technology development. This includes initiatives like “Make in India,” which aims to boost domestic production.

The defence sector offers lucrative opportunities across various segments. The defence Aerospace sector alone accounts for USD 50 billion, covering investments in aircraft, helicopters, unmanned aerial vehicles (UAVs), avionics, and related systems. Defence Shipbuilding is another significant opportunity area, with USD 38 billion potential for naval vessels, submarines, patrol boats, and support ships.

Investments in Missiles/Artillery/Gun Systems are projected to reach USD 21 billion, aligning with India’s efforts to enhance its artillery and missile capabilities. The report also highlights substantial growth in defence exports, totaling USD 29 billion, with momentum expected to continue.

The report also mentions specific companies that have potential upside in the sector. Hindustan Aeronautics (HAL) is noted for its strong position in fighter aircraft and helicopters, as well as its capability upgrade for the development of an indigenous engine program. Bharat Electronics is highlighted for its increased visibility on order inflows, conviction on margins delivery, and expansion in returns ratios.

Overall, the Indian government’s support for the defence sector, coupled with the industry’s focus on expanding global presence through exports and collaboration, creates a favorable environment for companies in the sector to capitalize on opportunities and drive growth.