Indian defence market set for 14 pc annual growth amid govt's indigenization push: Report

Citing factors such as global geopolitical tensions and India's rising focus on self-reliance, the report added that these factors are fuelling order flow and revenue growth for domestic defence companies. "Government focus on building country-to-country relations to promote exports is icing on the cake," Jefferies added.

It further added that India's defence spending will double between FY24 and FY30, which should continue to push the stock prices of the defence companies higher.

India is expected to have a defence market opportunity worth USD 90-100 billion over the next 5-6 years, with the defence industry likely to grow at 13 per cent annually from FY24 to FY30.

It added, that even though India is one of the top three countries in terms of defence spending globally, in 2022, its spending was only about 10 per cent of what the U.S. spent and 27 per cent of China's spending.

India is the second-largest importer of defence equipment, making up 9 per cent of global arms imports.

The expectation is that India's defence spending on big equipment (capital defence) will keep growing at around 7-8 per cent per year, just like in the last 10 years, the American financial services company stated in its anticipation. Going further, it added that the export defence opportunity for the companies is expected to rise at 18 per cent CAGR in FY24-30E. India's defence exports rose 14 times in FY17-24 to USD 2.6 billion.

"We believe this should rise further to USD 7 bn by FY30E and is directionally in line with the government target of achieving USD 6 billion by FY29E," it added.

For Indian exporters, Italy, Egypt, the UAE, Bhutan, Ethiopia, and Saudi Arabia form the most attractive defence destinations. Middle East (ME) accounts for 33 per cent of global arms imports at USD 11 billion and offers an opportunity for India. Qatar and Saudi account for 52 per cent of ME imports, as per the report.