The Indian defence sector is poised for significant growth, with projections indicating a 20% compound annual growth rate (CAGR) from FY24 to FY29. This expansion is supported by strong government initiatives and increased participation from the private sector. CareEdge Ratings highlights that the sector is expected to maintain a PBILDT margin of around 20% during this period, reflecting its robust financial health and operational efficiency.

The Indian government has consistently allocated substantial budgets for defence, with a commitment of ₹6.22 lakh crore for FY25. This funding is crucial for enhancing the country's military capabilities and reducing reliance on imports.

Programs like 'Make in India' are driving efforts to boost domestic production of military equipment, thereby decreasing dependency on foreign suppliers. This shift is expected to enhance India's selfreliance in national security matters.

The increasing role of private companies in defence production is pivotal. These entities are anticipated to leverage their technological expertise to innovate and modernize India's defence capabilities.

India's defence exports have seen substantial growth, with an estimated CAGR of about 19% from FY24 to FY29. The government has set an ambitious target of ₹50,000 crore in defence exports by 202829, which aligns with the overall production goals.

Investment in emerging technologies such as artificial intelligence and hypersonic weapons is expected to further enhance India's defence capabilities, necessitating increased funding for research and development.

According to the analysis conducted by concern on major DPSUs, New DPSUs and Other PSUs/JVs, which form about 85% of all their aggregate total defence production, there is a consistent upward trend in the total operating income (TOI). Historical data indicates a CAGR of approximately 14% in TOI during the last 3 years ending FY24, a trend expected to improve in the medium term on the back of their healthy order book. Profit Before Interest, Lease, Depreciation, and Tax (PBILDT) is anticipated to remain at about 20% during FY25, underscoring these entities healthy profitability. It is anticipated that in the future these DPSUs will play a pivotal role in reducing defence imports and bolstering exports, thereby positioning India prominently in the global defence landscape.

Overall, the Indian defence sector is on a trajectory towards modernization and self sufficiency, with strategic plans in place to bolster its global stature and operational capabilities.