India's defence sector is poised for significant growth amid global shifts, as highlighted in a report by Nuvama. The sector is expected to experience substantial expansion driven by both domestic and international factors.

Defence exports are projected to reach ₹203 billion in FY25, with a government target of ₹500 billion by FY29, marking a significant increase in India's role in the global defence market.

On the international front, European defence orders are anticipated to begin flowing into India as early as the first half of FY26. This development is largely due to Europe's limited manufacturing capacity and workforce shortages, particularly in aerospace and missile supply chains. As a result, European nations are increasingly seeking partnerships with Indian defence manufacturers to address these constraints.

Domestically, India is set for a substantial defence push with the government planning to place large-scale defence orders worth ₹1.5 trillion by March 2025. This move aims to address the slow ordering momentum in FY25 and is expected to provide a significant boost to defence stocks.

The global context also plays a crucial role, with the US decision to reduce military aid to Ukraine exposing NATO's reliance on American defence funding.

Historically, the US has contributed about 70% of NATO's total defence expenditure. With proposed cuts in US defence spending, European nations face pressure to enhance their defence capabilities, further opening opportunities for Indian defence manufacturers.

India's defence exports have already shown impressive growth, reaching a record ₹21,083 crore in FY2023-24, marking a 32.5% increase over the previous year. This growth is attributed to significant contributions from both the private sector and Defence Public Sector Undertakings (DPSUs).

India's defence sector is at an inflection point, poised for robust growth in the coming years due to rising global demand and a strong domestic push.

ANI