India's defence export is likely to grow at 18% CAGR between FY24-FY30, driven by the 'Make in India' initiative and thrust on local manufacturing. Global investment firm Jefferies said the geopolitical tensions, coupled with the government's push towards indigenisation of the defence sector, have opened up an increasing number of opportunities for Indian defence firms.
The report further said that the government is also building bilateral relations in order to encourage exports in the international market. The potential market opportunity for Indian defence companies is expected to increase at 14 per cent CAGR between FY24 to FY30E, said the report. "On one hand, the Indian government is emphasizing indigenization of defence. On the other hand, export of defence equipment is also being encouraged. This will increase the order inflow in the defence sector," the report mentioned.
India's defence spending is set to double between FY24 and FY30. All these factors will further push the share prices of defence companies in the coming future. In the next 5 to 6 years, defence companies will get opportunities worth $90 billion to $100 billion in the Indian market. In 2022, India accounted for 10 percent of US and 27 percent of China's defence expenditure. India is the second biggest importer of defence equipment in the world. It accounts for 9 per cent of the total arms imports in the world.
The country's defence exports have increased 14 times to $2.6 billion between FY 2017 and FY 2024. Missiles, radars, naval systems, helicopters, and surveillance equipment comprise its export basket of defence products. Last week, in a big boost to the local defence manufacturing, the Centre approved 10 capital acquisition proposals amounting to Rs 1,44,716 crore including for the modernisation of the Indian Army's tank fleet with a futuristic Main Battle Tank.
DAC granted AoN for 10 capital acquisition proposals amounting to Rs 1,44,716 crore. Out of the total cost, 99 per cent is from indigenous sources under the 'Buy (Indian)' and 'Buy (Indian-indigenously designed, developed and manufactured)', the ministry said in a statement.
The move paves the way for the acquisition of Future-Ready Combat Vehicles (FRCVs), Air Defence Fire Control Radar, Dornier-228 aircraft, next-generation Fast Patrol and Offshore Patrol Vessels.
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