India’s defence sector is set to witness robust growth, with production expected to increase at a compound annual growth rate (CAGR) of around 20% from FY24 to FY29, according to a CareEdge Ratings report released on Monday. This growth is attributed to significant government reforms and increased private sector involvement, which are transforming the country into a self-reliant defence powerhouse.
Private Sector Driving Modernisation
The collaboration between the government and private players, both domestic and international, has accelerated advancements in key areas such as arms, aerospace, naval technologies, and electronics. With expertise in engineering and technology, private entities are playing a crucial role in modernising India’s defence capabilities and reducing reliance on imports.
Policies like ‘Make in India’ and relaxed foreign direct investment (FDI) norms have strengthened domestic manufacturing, attracted global investments, and boosted exports of military equipment. Over the past six years, Indian defence exports have grown at an impressive CAGR of 28%.
Ambitious Goals and Increased Spending
India has consistently allocated 1.9% to 2.8% of its GDP to defence. For FY25, a record Rs 6.22 lakh crore has been earmarked for the sector, with an ambitious annual production target of Rs 1.75 lakh crore. This figure is projected to reach Rs 3 lakh crore by FY29, reflecting the nation’s commitment to strengthening its defence capabilities.
Growing Global Stature
Historically dependent on foreign suppliers, India is steadily shifting towards indigenous manufacturing and technological self-sufficiency. Defence exports, which include aircraft, naval systems, missile technology, and military hardware, are expected to grow at a CAGR of 19% over the next five years, driven by increased government spending and a broader export base.
Conclusion
The combined efforts of the government and private sector, supported by progressive policies, have positioned India as a rising force in global defence. As the nation advances towards self-reliance, it is poised to enhance its defence capabilities, reduce imports, and solidify its global stature.
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