India’s defence exports set to grow at 18% CAGR by 2030: Report

GOI’s push for defense indigenization boosts opportunities for Indian companies

India’s defence exports are projected to expand at a compound annual growth rate (CAGR) of 18% from FY24 to FY30, fueled by the government’s ‘Make in India‘ initiative and a strong push for local manufacturing, according to a recent report by global investment firm Jefferies.

The report highlights that geopolitical tensions and India’s focus on indigenization are creating new opportunities for domestic defence companies. It also notes that the Indian government is actively building bilateral relationships to enhance export prospects in the global market.

From FY24 to FY30, the potential market for Indian defence companies is expected to grow at a CAGR of 14%, the report states. This growth is attributed to the dual emphasis on domestic indigenization and the encouragement of defence exports, which is anticipated to boost order inflow in the sector.

India’s defence spending is projected to double during this period, further driving the growth of defence company share prices. Over the next 5 to 6 years, defence companies are expected to have opportunities worth $90 billion to $100 billion within the Indian market. As of 2022, India’s defence expenditure was 10% of that of the US and 27% of China’s.

India remains the second-largest importer of defence equipment globally, accounting for 9% of total arms imports. However, Indian defence exports have seen a remarkable increase, growing 14-fold to $2.6 billion between FY 2017 and FY 2024. The country’s export portfolio includes missiles, radars, naval systems, helicopters, and surveillance equipment.

In a significant development last week, the Indian government approved 10 capital acquisition proposals worth Rs 1,44,716 crore to bolster local defence manufacturing. The Defence Acquisition Council (DAC), led by Defence Minister Rajnath Singh, granted Acceptance of Necessity (AoN) for these proposals, with 99% of the cost sourced from indigenous suppliers under the ‘Buy (Indian)’ and ‘Buy (Indian-indigenously designed, developed and manufactured)’ categories.

This approval paves the way for acquiring future-ready combat vehicles (FRCVs), air defence fire control radars, Dornier-228 aircraft, and next-generation fast patrol and offshore patrol vessels, marking a substantial leap in India’s defence capabilities and local manufacturing prowess.

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