India's defence sector is experiencing significant growth, projected to reach USD 23.05 billion by 2029, from its current size of USD 17.40 billion in 2024, according to a Mordor Intelligence Report.
This growth, at a CAGR of 5.79%, is driven by the government's ambitious "Make in India" initiative, fostering domestic production and reducing dependency on imports.
Modernization and Indigenous Production
The Indian government's focus on modernization and indigenous production aligns with the "Make in India" initiative. This approach encourages partnerships with domestic and international defence companies to enhance capabilities and ensure self-reliance in critical technologies.Key Drivers
- Border Conflicts: Ongoing border conflicts with neighboring countries necessitate substantial procurement of advanced military equipment.
- Increased Defence Spending: India's defence budget for 2023-2024 allocates USD 19.64 billion for new weapons and platforms and USD 2.79 billion for defence-related research and development. This investment reflects the government's commitment to bolstering defence capabilities.
Challenges and Market Dynamics
Despite the growth prospects, India's limited indigenous capabilities in advanced defence technologies necessitate reliance on foreign suppliers for critical components. This dependency can create vulnerabilities in the supply chain, potentially affecting procurement timelines and national security.Air Force Segment Takes the Lead
The Air Force segment is expected to dominate the market during the forecast period. Modernization efforts, including the delivery of Dassault Rafale and HAL Tejas LCA Mk1 aircraft, are key drivers of this growth.Additionally, the development of the AMCA project and a new 13-ton-class helicopter by HAL marks significant progress towards self-reliance in aircraft manufacturing.
Naval Vessel Segment Strengthens Maritime Defence
The naval vessel segment is also poised for substantial growth. The Indian Navy is focused on enhancing its capabilities through modernization and indigenous production.The commissioning of the INS Sandhayak survey vessel and the construction of 67 ships under the Make in India initiative are notable developments.
Market Players and Partnerships
The Indian defence market is semi-consolidated, with key players like Bharat Electronics Limited (BEL), Hindustan Aeronautics Limited (HAL), Defence Research and Development Organisation (DRDO), Rostec, and Airbus SE.The Make in India initiative has fostered numerous partnerships between foreign and local manufacturers, including collaborations with the Hinduja Group, Ashok Leyland, Elbit Systems Ltd., Tata Motors, Bharat Forge, General Dynamics, and others.
Future Outlook
The Indian defence market is on a trajectory of substantial growth, driven by increased defence spending, modernization initiatives, and a strong focus on self-reliance.While challenges remain in terms of technological dependencies, strategic investments and partnerships are expected to strengthen India's defence capabilities and ensure robust market growth in the coming years.
