India to export defense equipment worth ₹50,000cr by FY29: Report
What's the story
India's defense exports are likely to touch ₹50,000 crore by the end of financial year 2028-29 (FY29), a report by Kotak Institutional Equities has said. The report said that indigenous weapons systems are increasingly gaining global acceptance and geopolitical tensions are driving military expenditure. The growth is also supported by government policies aimed at boosting domestic manufacturing.
Export growth
Defense exports have expanded nearly 50 times in last decade
According to the report, India's defense exports have expanded nearly 50 times in the last decade.
They grew from ₹700 crore in FY2014 to an estimated ₹38,400 crore in FY2026.
The growth was driven by cost-competitive indigenous platforms such as Akash surface-to-air missile system, Pinaka multi-barrel rocket launcher, BrahMos cruise missile, and Nagastra loitering munition.
Export destinations
US largest export destination, Europe emerging as important market
The United States continues to be the largest export destination for Indian defense products, accounting for nearly 50% of shipments from FY2019-24.
Europe and Armenia are emerging as important markets.
Kotak said India's competitive pricing, easing export controls, deeper defense diplomacy, and operational performance of indigenous systems should help achieve the government's FY2029 export target.
Sector growth
Brokerage sees structural multi-year growth cycle for defense sector
The brokerage expects India's defense sector to remain on a structural multi-year growth cycle. It estimates defense capital expenditure will grow at 11% compound annual growth rate during FY2026-30, reaching ₹2,80,000 crore by FY2030. This is supported by rising indigenization and accelerating military modernization efforts.
Procurement trends
Domestic procurement
Domestic procurement now accounts for more than 70% of defense purchases, up from 54% in FY2019.
This is due to import embargoes and higher indigenous content requirements under the Defence Acquisition Procedure (DAP) 2020.
Acceptance of Necessity (AoN) approvals have surged nearly tenfold over FY2021-26 to ₹9.3 trillion, indicating a potential order pipeline of ₹6.5-7 trillion over FY2027-29 after adjusting for large one-off acquisitions.
Drone market
Drones could be next big growth driver
Kotak also highlighted that drones could be the next big growth driver for India's defense exports.
The global military drone market is expected to grow from $30 billion in 2024 to $75 billion by 2029.
India is likely to spend $25-30 billion on military drones and another $4-5 billion on counter-drone systems over the next decade.
Budget growth
India's defense budget will keep expanding
The report predicts that India's defense budget will keep expanding as military modernization accelerates. Defense spending has grown at an 8.8% compound annual growth rate between FY2015-27 and capital expenditure is expected to rise faster as pension costs moderate.