Report Overview

The government’s heightened focus on indigenous defense manufacturing through Atmanirbhar Bharat program, increasing budgetary allocation for defense expenditure, and growing modernization needs are expected to drive the India Defense Market during the forecast period between 2024 and 2030.

India Defense Market – Industry Trends & Forecast Report, 2030

The India Defense Market size was estimated at USD 23.13 billion in 2023. During the forecast period between 2024 and 2030, the India Defense Market size is projected to grow at a CAGR of 7.98% reaching a value of USD 29.27 billion by 2030. Prominent drivers of the market include the government’s increasing number of supportive initiatives emphasizing modernization and self-reliance in defense. These efforts, including the "Make in India" campaign, prioritize indigenous production, research and development, fostering collaborations with both domestic and international defense entities to bolster capabilities and reduce the country’s reliance on imports. Other key factors driving the market include the pressing need for military equipment due to ongoing border disputes with neighboring countries like China, Pakistan, and Bangladesh. Tensions along the Line of Actual Control (LAC) with China and similar conflicts with Pakistan have underscored the necessity for large-caliber munitions. India's significant defense expenditure, as highlighted by the Stockholm International Peace Research Institute (SIPRI) 2022 report, positions it as the world's fourth-largest defense spender, allocating USD 81.4 billion. Sustained growth in India's defense budget is crucial for the market expansion. The Government of India's allocation for purchasing new weapons and platforms in 2023-2024 underscores the country’s commitment. Furthermore, earmarking funds for defense-related R&D align with the vision of "Atmanirbhar Bharat," or self-reliant India, promoting indigenous defense manufacturing. These strategic investments are poised to further propel the India Defense Market forward during the period in analysis.

Defense – Overview

The defense industry is witnessing a surge in technological advancements, strategic partnerships, and a heightened focus on cybersecurity. Nations are increasingly prioritizing investments in state-of-the-art technologies, including autonomous systems and advanced weaponry, recognizing their significance. Moreover, the escalating demand for cross-domain expertise and interoperability is reshaping procurement strategies and fostering a competitive environment in the market.

India Defense Market

Growth Drivers

Rising Cancer Burden

Rising Defense Expenditure

The unveiling of India's INR 6.21-lakh crore (approximately USD 74.52 billion) annual Defense budget underscores a significant escalation in defense expenditure. With a dual emphasis on fostering self-reliance and bolstering exports, the budget signals a strategic shift in India's defense priorities. This substantial allocation reflects a commitment to modernizing the nation's defense capabilities and enhancing its strategic position on the global stage. The move not only addresses the imperative for self-sufficiency but also aims to leverage defense capabilities to bolster economic growth through export opportunities.

Focus on Self-Reliance

Self-reliance in defense stands as a foundational principle of India's defense production policy, reinforced by the recent "ATMA NIRBHAR BHARAT" initiative. This concerted effort underscores a dedicated push toward achieving self-sufficiency. Over time, transparent procurement procedures, production policies, and initiatives like 'Make in India' have significantly bolstered the demand for indigenous defense products. The Indian Defense Industry has adapted, offering a diversified product mix to meet the armed forces' requirements. Moreover, recent successes in exports indicate India's emergence as a potential defense manufacturing hub. However, challenges persist, notably in the form of multiple registration processes for defense manufacturers and suppliers. Streamlining these processes is essential to further solidify India's journey towards self-reliance in defense.

Challenges

Bureaucratic Hurdles

Bureaucratic hurdles present a significant restraint to the growth of the India Defense Market. Cumbersome administrative processes, complex regulations, and lengthy procurement procedures may impede the timely acquisition of essential defense resources. These hurdles not only slow down the pace of modernization but also inhibit the efficient utilization of defense budgets. Streamlining bureaucratic processes and fostering a more agile decision-making framework are imperative to unlock the market's full potential and meet the nation's evolving defense needs swiftly and effectively.

Impact of Escalating Geopolitical Tensions on India Defense Market

Geopolitical tensions can have a multifaceted impact on the India Defense Market by fueling increased defense spending and prioritizing indigenous defense capabilities. India may allocate more resources towards modernizing its armed forces, acquiring advanced weaponry, and enhancing domestic defense production capabilities. Additionally, heightened tensions may stimulate partnerships with international defense suppliers, fostering technology transfer and collaboration. However, economic strains due to heightened security concerns could constrain overall defense budgets, necessitating strategic prioritization and efficient resource allocation to meet evolving security challenges while balancing fiscal constraints.

India Defense Market

Segmental Coverage

 India Defense Market – By Armed Forces

By armed forces, the India Defense Market is divided into Indian Army, Indian Navy, and Indian Air Force segments. The Indian Air Force segment holds the highest share in the India Defense Market by armed forces. The emphasis on modernizing aircraft capabilities, coupled with anticipated deliveries of various aircraft, such as the Dassault Rafale, Ilyushin Il-76 (A50E) (AEW), HAL Tejas LCA Mk1, Dornier 228, HAL Dhruv ALH/Rudra, and HAL Light Combat Helicopter within the projected timeframe, is expected to propel growth in this sector. India's burgeoning pursuit of self-reliance in manufacturing and operational domains presents substantial prospects for local suppliers. Notably, India's involvement in the AMCA project exemplifies this trajectory, with the first flight expected between 2025 and 2026 and full-scale production potentially achievable by 2030.

India Defense Market – By Product Type

Based on product type, the India Defense Market is divided into Fixed Wing Aircraft (fighter jets, transport aircraft); Rotorcraft (helicopters); Ground Vehicles (tanks, armored fighting vehicles); Naval Vessels (aircraft carriers, submarines, destroyers); Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) Systems; Weapons & Ammunition; Protection & Training Equipment; and Unmanned Aerial Vehicles (UAVs) segments. The naval vessels segment holds the highest share in the India Defense Market by product type. The Indian Navy, a pivotal aspect of the nation's defense, safeguards maritime interests with a diverse fleet. Its core mission is protecting maritime borders, detecting threats, and maintaining security in both peace and war. Rising defense spending, exemplified by a notable increase in 2022, spurs demand. With 181 surface vessels and 18 submarines, the Navy pursues innovations and incorporating unmanned vessels and underwater systems. The recent commissioning of INS Sandhayak underscores this commitment, enhancing hydrographic survey capabilities. About 67 ships are under construction as part of the Make in India initiative, signaling sustained growth in the naval vessel segment.

India Defense Market – By Supplier

On the basis of supplier, the India Defense Market is split into Domestic Companies and Foreign Companies segments.

India Defense Market – By Region

Geographically, the India Defense Market is divided into North India, South India, East India, and West India regions.

Competitive Landscape

Major players operating in India Defense Market include The Boeing Company, Kalyani Group, Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), Rafael Advanced Defense Systems Ltd, Reliance Group, IAI Group, Mahindra & Mahindra Ltd, Larsen & Toubro Limited, Ordnance Factory Board (OFB), Hinduja Group, Tata Sons Private Limited, Defense Research and Development Organisation (DRDO), Airbus SE, Goa Shipyard Limited (GSL), and Rostec. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In April 2024 - Kopin Corporation, renowned for its optical solutions and microdisplays, expanded its reach into the Indian Defense Market with a third production order for its OLED microdisplays. These displays are integral components of thermal imaging vision systems used by the Indian Armed Forces, both mounted and handheld. The order comprises more than 1,200 units.

• In February 2024 - Mahindra Defence Systems signed a strategic Memorandum of Understanding (MoU) with Embraer Defense & Security to jointly pursue the acquisition of the C-390 Millennium multi-mission aircraft by the Indian Air Force. The collaboration aims to enhance the upcoming Medium Transport Aircraft (MTA) procurement project.

Scope of the Report

By Armed Forces

• Indian Army

• Indian Navy

• Indian Air Force

By Product Type

• Fixed-Wing Aircraft (Fighter Jets, Transport Aircraft)

• Rotorcraft (Helicopters)

• Ground Vehicles (Tanks, Armored Fighting Vehicles)

• Naval Vessels (Aircraft Carriers, Submarines, Destroyers)

• Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) Systems

• Weapons & Ammunition

• Protection & Training Equipment

• Unmanned Aerial Vehicles (UAVs)

By Supplier

• Domestic Companies

• Foreign Companies

By Region

• North India

• South India

• East India

• West India