New Delhi [India], March 15 : India's defence sector is poised for substantial growth amid global shifts according to a report by Nuvama.
Defence exports are expected to reach Rs 203 billion in FY25, with a government target of Rs 500 billion by FY29.
European defence orders could begin flowing as early as the first half of FY26, marking a major milestone for the sector. Given Europe's manufacturing constraints, Indian defence companies are well-positioned to capitalize on rising export opportunities.
Europe's limited local manufacturing capacity and workforce shortages are opening doors for Indian defence manufacturers to step in.
"Europe's defence expansion is constrained by limited local manufacturing capacity and skilled workforce shortages, especially in aerospace and missile supply chains. As a result, European nations are increasingly looking at partnerships and collaborations with Indian defence manufacturers" says the report
On the domestic front, India is set for a substantial defence push. The government has announced plans to place Rs 1.5 trillion worth of large-scale defence orders by March 2025. This move, aimed at addressing slow ordering momentum in FY25, is expected to provide a significant boost to defence stocks.
The US decision to reduce military aid to Ukraine has exposed NATO's heavy reliance on American defence funding. Historically, the US has contributed around 70 per cent of NATO's total defence expenditure, averaging 3.4 per cent of its GDP over the past decade.
With the Pentagon proposing USD 50 billion in annual cuts, European nations are under pressure to enhance their own defence capabilities.
"The U.S. actions highlight Europe's potential weakness without the US support. Historically, only four out of 32 NATO members (excluding the U.S.) have met the 2 per cent GDP defence spending target. Meanwhile, the U.S. has contributed ~70 per cent of NATO's total defence expenditure, averaging 3.4 per cent of its GDP from 2014-24. With the Pentagon now proposing USD 50 billion in annual cuts, Europe faces mounting pressure to bolster its own defence capabilities," said the report
Defence exports of India touched a record Rs 21,083 crore in the FY2023-24, a growth of 32.5 per cent over the previous fiscal year when the figure was Rs 15,920 crore.
The figures indicated that defence exports grew by 31 times in the last 10 years as compared to FY 2013-14. The defence industry, including the private sector and DPSUs, have significantly contributed in achieving the highest-ever exports. The private sector and DPSUs contributed about 60 per cent and 40 per cent respectively.
With rising global defence demand and a strong domestic push, India's defence sector is at an inflection point, poised for robust growth in the coming years says the report.
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