India's Defence Manufacturing Sector Expected to Achieve 20% Annual Growth from FY 2024 to FY 2029

Mumbai, Dec 30 (NationPress) With solid government reforms and a surge in private sector engagement, India's defence production is forecasted to achieve a compound annual growth rate (CAGR) of nearly 20% between FY24 and FY29, according to a report released on Monday.

Indian defence companies are poised to significantly bolster the nation’s defence capabilities, decrease reliance on imports, and enhance its global standing, as noted in the CareEdge Ratings report.

The partnership between government and private sector players in India's defence industry has catalyzed progress in areas such as arms and ammunition, aerospace, electronics, and naval technologies.

Private sector firms, both local and international, are anticipated to play a critical role in the push for defence modernization, utilizing their engineering and technological prowess, the report highlighted.

This partnership has been strengthened by initiatives like 'Make in India' and liberalized FDI policies, which have not only boosted domestic manufacturing but also attracted foreign investments in defence innovation, leading to significant growth in military exports, the report emphasized.

In recent years, India's defence budget has consistently accounted for between 1.90% and 2.8% of its gross domestic product (GDP).

For the fiscal year 2024-25, a considerable sum of Rs 6.22 lakh crore has been allocated for the defence industry.

Moreover, India has set an ambitious target for annual defence production of Rs 1.75 lakh crore for FY25, which is projected to grow at a CAGR of around 20% to reach Rs 3 lakh crore (as per the Ministry of Defence) by FY29, highlighting its commitment to becoming a self-sufficient defence powerhouse, the report observed.

Traditionally, India has been a net importer of defence equipment, heavily depending on foreign suppliers to satisfy its crucial military needs. However, determined efforts to foster indigenous defence manufacturing and technology advancements, bolstered by policy reforms like the 'Make in India' initiative, are gradually shifting this trend.

In the last six years leading up to FY24, Indian defence exports have experienced a robust CAGR of approximately 28%.

CareEdge Ratings predicts that India’s defence exports will rise in alignment with government spending in the sector at an estimated rate of about 19% during the next five years (i.e., from FY24 to FY29) on a broader base.

India’s defence exports include a variety of products such as aircraft, naval systems, missile technology, and military hardware.