Mumbai: On the back of robust government reforms and increasing private sector participation, India’s defence sector production is set to grow at a compound annual growth rate (CAGR) of around 20 per cent during FY24-FY29, according to a report released on Monday.
Indian defence sector companies are set to further enhance the country’s defence capabilities, reduce import dependence, and elevate its global stature, the CareEdge Ratings report stated.
The collaboration between government and private sector entities in India’s defence sector has driven advancements in arms and ammunition, aerospace, electronics, and naval technologies.
Private sector entities, both domestic and multinational, are expected to play a pivotal role in advancing defence modernisation, leveraging their engineering and technological expertise, the report observed.
This collaboration has been supported by policies such as ‘Make in India’ and liberalised FDI norms, which have enhanced domestic manufacturing capabilities, attracted international investments in defence innovation and driven notable growth in exports of military equipment, the report pointed out.
In recent years, India’s defence budget has consistently ranged between 1.90 to 2.8 per cent of its gross domestic product (GDP).
For the fiscal year 2024-25, a substantial allocation of Rs 6.22 lakh crore has been dedicated for the defence sector.
Furthermore, India has set an ambitious annual defence production outlay of Rs 1.75 lakh crore for FY25 which is expected to grow at a CAGR of around 20 per cent to Rs 3 lakh crore (as per Ministry of Defence) by FY29, underscoring its commitment to becoming a self-reliant defence powerhouse, the report noted.
Historically, India has been a net importer of defence equipment, heavily relying on foreign suppliers to meet its critical military needs. However, concerted efforts to promote indigenous defence manufacturing and technology development, supported by policy reforms such as the ‘Make in India’ initiative, are bringing about a gradual shift.
Over the last six years ending FY24, Indian defence exports have grown at a healthy CAGR of approximately 28 per cent.
CareEdge Ratings anticipated that India’s defence exports will grow in tandem with government spending in the sector at an estimated rate of about 19 per cent during the next 5 years (i.e. from FY24 to FY29) on a more extensive base.
India’s defence exports include various products, such as aircraft, naval systems, missile technology, and military hardware.
(IANS)
