India’s Defence Sector Poised for Major Growth Amid Global Shifts: Report

India’s defence sector is set for substantial expansion, with exports expected to reach ₹203 billion in FY25 and a government target of ₹500 billion by FY29, according to a report by Nuvama. The report highlights India's growing role in global defence supply chains, particularly in Europe, where local manufacturing constraints are creating new opportunities for Indian companies.

Europe Looks to India for Defence Supplies

European defence orders could start flowing in the first half of FY26, marking a significant milestone for India's defence industry. With Europe facing skilled workforce shortages and limited local manufacturing capacity, nations are increasingly seeking collaborations with Indian defence manufacturers, especially in aerospace and missile supply chains.

Domestic Push: ₹1.5 Trillion Orders by March 2025

On the domestic front, the Indian government has announced plans to place ₹1.5 trillion worth of large-scale defence orders by March 2025. This move is aimed at addressing slow ordering momentum in FY25 and is expected to provide a major boost to defence stocks.

US Defence Cuts and NATO’s Growing Pressure

The report also sheds light on NATO’s heavy reliance on US defence funding, with the US historically contributing around 70% of NATO’s total defence expenditure. However, with the Pentagon proposing $50 billion in annual cuts, European nations are under mounting pressure to enhance their own defence capabilities, further opening doors for Indian defence firms.

Record-Breaking Defence Exports

India’s defence exports touched a record ₹21,083 crore in FY 2023-24, marking a 32.5% increase from ₹15,920 crore in the previous fiscal year. Over the past decade, defence exports have surged 31 times compared to FY 2013-14, with the private sector and Defence Public Sector Undertakings (DPSUs) contributing 60% and 40%, respectively.

Bright Future for India’s Defence Industry

With rising global demand and a strong domestic push, the report indicates that India’s defence sector is at an inflection point, poised for robust growth in the coming years.

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