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Indian defence market set for 14% annual growth amid government indigenisation
Industry News- Sep 10,24
The market opportunity for Indian defence companies is estimated to range between $90-100 billion over the next 5-6 years, with an annual growth rate of approximately 13% during this period.
India's defence market is projected to grow at a compound annual growth rate (CAGR) of 14% from FY 2024 to FY 2030, driven by the government’s push for indigenisation and export opportunities, according to a sectoral report by Jefferies.
The report highlights that global geopolitical tensions and India’s increasing emphasis on self-reliance are boosting order flow and revenue for domestic defence companies. Additionally, the government’s focus on enhancing international relations to promote defence exports is further beneficial.
India’s defence spending is expected to double between FY24 and FY30, likely resulting in higher stock prices for defence firms. The market opportunity for Indian defence companies is estimated to range between $90-100 billion over the next 5-6 years, with an annual growth rate of approximately 13% during this period.
Despite being one of the top three global defence spenders, India’s expenditure in 2022 was only 10% of that of the U.S. and 27% of China’s. India is the second-largest importer of defence equipment, accounting for 9% of global arms imports. Defence spending on major equipment is expected to continue growing at 7-8% annually, consistent with trends over the past decade.
The report also notes that defence exports from India are anticipated to grow at an 18% CAGR from FY24 to FY30, with exports rising from $2.6 billion in FY24 to an estimated USD 7 billion by FY30. This aligns with the government’s target of reaching $6 billion by FY29.
Key export markets for Indian defence products include Italy, Egypt, the UAE, Bhutan, Ethiopia, and Saudi Arabia. The Middle East, accounting for 33% of global arms imports, presents significant opportunities, with Qatar and Saudi Arabia alone representing 52% of the region’s imports.
(ET)
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