Several defence stocks are in focus after NATO allies agreed to hike defence spending by 5 percent from the earlier guided 2 percent. In this article, we will dive deeper into what this means to Indian defence companies.
In a statement, NATO cited that nations have committed to dedicating 3.5 percent of GDP to core defence, to include personnel and weaponry, plus 1.5 percent to broader defence requirements, such as cyber security, protecting pipelines, and improving roads and bridges to military standards.
This move opens the space for Indian defence companies that export their products massively to these nations. Companies like Sika Interplant, Data Patterns, Zen Technologies, Paras Defence, Ideaforge, etc saw their stock rise in today’s trading session.
India’s defence production reached ₹1.27 lakh crore in FY24, marking a 174% rise since FY15, driven by the Make in India initiative and a massive 169 percent jump in defence budget spending to Rs 6.81 lakh crore in FY26 from Rs 2.53 lakh crore in FY14. Several Initiatives, such as iDEX and SAMARTHYA, are driving technological advancements in AI, cyber warfare, and indigenous weapon systems. Additionally, defence production is expected to reach Rs 1.75 lakh crore by the end of FY25 and Rs 3 lakh crore by FY29.
Additionally, India’s defence exports surged to a record high of Rs 23,622 crore in FY25, registering a growth of 12.04 percent from FY24 exports of Rs 21,083 crore. India already exports to 80 countries and plans to export goods worth Rs 50,000 crore by FY29.
The North Atlantic Treaty Organisation (NATO) is a military alliance formed in 1949 by countries in North America and Europe, formed to protect its members from the Soviet Union (Russia). NATO started with 12 countries and now it has 32 countries. The main idea was simple: “An attack on one member is an attack on all.”
Conclusion
In summary, NATO’s historic decision to significantly increase defence spending comes at a time when India’s own defence manufacturing and defence export ability is rapidly expanding. With rising indigenous production, record-high exports, and increasing global confidence in Indian defence technology, Indian manufacturers will be well-positioned to take advantage of this increased global defence effort.
As NATO nations increase purchasing budgets, new export opportunities will arise for companies like Sika Interplant, Data Patterns, Zen Technologies, and others. With strong policy commitment and rising global interest, India’s defence sector is beginning a new growth phase its potential to begin to realise its role in the global defence supply chain could emerge.
Written by Satyajeet Mukherjee
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