Drones, indigenisation, increasing capex drive multi‑year boom in India’s defence sector

New Delhi, June 30 (IANS) Drones are set to remain among the fastest‑growing segments within India’s defence ecosystem, with the tactical drone procurement opportunity rising from Rs 30‑35 billion in the previous procurement cycle to nearly Rs 120‑140 billion, a report said on Tuesday.

India’s defence sector is entering a structural, multi-year growth cycle driven by indigenisation, increasing defence capital expenditure, rising exports and accelerated adoption of advanced technologies, the report from PL Capital said.

An additional Rs 300 billion strategic drone opportunity is expected to emerge in coming years, the report added.

A defence Conference hosted by PL Capital saw industry experts saying nearly 75 per cent of the Ministry of Defence’s capital procurement is now reserved for domestic sourcing. Such a shift creates significant opportunities for Indian companies across defence electronics, aerospace, shipbuilding, autonomous systems, semiconductors and space technologies.

As the sector evolves beyond platform manufacturing, value creation is expected to increasingly shift towards companies developing proprietary technologies, mission-critical software, electronic warfare systems, sensors and advanced defence electronics.

Evolving battlefield requirements shortened procurement cycles from five to ten years to nearly six to eighteen months for drone platforms, creating faster commercialisation opportunities for indigenous manufacturers, the report said.

While drone hardware may increasingly become commoditised, long-term differentiation will depend on payload capability, AI-enabled autonomy, sensing technologies, electronic warfare resilience and counter-drone systems.

Space and aerospace also emerged as major long-term growth themes. Experts highlighted that the Government’s proposed constellation of 51 military satellites represents only a fraction of India’s long-term strategic requirements, with future defence applications expected to require significantly larger satellite networks for continuous surveillance, communication and targeting capabilities.

Since the sector opened to private participation in 2020, the number of private space companies has grown from around seven to more than 300, creating opportunities across launch vehicles, satellite manufacturing, payload systems and downstream space applications.

India’s maritime ecosystem was identified as another major structural opportunity and the country currently incurs nearly $100 billion annually in freight payments, with almost 85 per cent flowing to foreign shipping companies, experts said.

Developing an integrated maritime ecosystem spanning shipbuilding, shipping, financing and arbitration could unlock a $500-700 billion opportunity over the long term, the report said.

—IANS

aar/pk