The Indian defence market is poised for significant growth, with projections indicating a compound annual growth rate (CAGR) of 14% from FY 2024 to FY 2030. This forecast, highlighted in a recent report by Jefferies, underscores the impact of the Indian government's strong focus on indigenisation and export opportunities within the defence sector.

Indigenisation Efforts: The Indian government has been actively promoting self-reliance in defence production through initiatives such as Make in India and Atmanirbhar Bharat. These programs aim to reduce dependency on foreign imports by encouraging domestic manufacturing.

As of now, India has indigenised a significant number of defence items, with ongoing efforts to increase this figure further. The government is also transitioning traditional ordnance factories into more efficient corporate entities to enhance production capabilities.

Global geopolitical tensions are driving increased demand for defence capabilities. This environment is creating a favourable landscape for domestic manufacturers to secure orders both locally and internationally.

The report anticipates that India's defence exports will grow at an impressive CAGR of 18% during the same period. India’s defence exports have already surged significantly, increasing fourteen-fold from FY 2017 to FY 2024, reaching approximately $2.6 billion. Projections suggest this could rise to $7 billion by FY 2030.

The total market opportunity for the Indian defence sector is estimated to be between $90 billion and $100 billion over the next five to six years. This growth is expected not only from increased domestic production but also from enhanced export capabilities as India strengthens bilateral relations with various countries.

India's defence spending is projected to more than double between FY 2024 and FY 2030. Despite being one of the top three global defence spenders, India's expenditure remains relatively low compared to other major powers, accounting for about 10% of U.S. spending and 27% of China's spending in 2022.

The anticipated growth in capital expenditure on major defence equipment is expected to continue at a rate of 7-8% annually, consistent with trends observed over the past decade.