India’s defence sector is experiencing robust growth, driven by the government’s strong emphasis on the Make in India initiative, increased defence spending, and a strategic focus on achieving self-reliance. Rising border tensions and global geopolitical challenges have spurred both domestic and international orders, demonstrating enhanced trust in the capabilities of Indian defence manufacturers.
Domestic production in the defence industry has surged to Rs. 1.27 lakh crore in FY24, marking a remarkable 174 percent increase since FY15. This impressive growth is supported by government programs such as iDEX, SAMARTHYA, and SRIJAN, along with the Positive Indigenisation Lists that now cover more than 17,000 items, encouraging indigenous manufacturing and innovation.
The defence budget has also seen significant expansion, rising from Rs. 2.53 lakh crore in FY14 to a projected Rs. 6.81 lakh crore in FY26. Looking forward, India aims to boost defence production to Rs. 3 lakh crore and achieve Rs. 50,000 crore in defence exports by 2029, reinforcing its goal of becoming a self-reliant and globally competitive defence manufacturing hub.
Defence Export Ambitions
India is targeting defence exports worth Rs. 30,000 crore in FY26 as part of its broader push to become a major global defence exporter. In line with this vision, the Ministry of Defence has set an ambitious goal of achieving Rs. 50,000 crore in defence exports by 2029, reflecting the country’s growing capabilities and international demand for indigenous defence equipment.
India’s defence exports include advanced equipment like bulletproof jackets, Dornier (Do-228) aircraft, Chetak helicopters, fast interceptor boats, and lightweight torpedoes. The Ministry of Defence’s annual report for 2022-23 also highlights key exports since 2017, such as weapon simulators, tear gas launchers, torpedo loading systems, night vision devices, armoured vehicles, weapons locating radars, and HF radios.
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Defence Sector Investing Options
Nifty Defence Index was launched on January 19, 2022, and the top constituents by weightage in the portfolio are dominated by defence and aerospace companies. Hindustan Aeronautics Ltd. holds the highest weight at 19.80%, followed by Bharat Electronics Ltd. at 18.53% and Solar Industries India Ltd. at 16.02%. Other significant holdings include Mazagon Dock Shipbuilders Ltd. (9.37%), Bharat Dynamics Ltd. (7.04%), and Cochin Shipyard Ltd. (6.72%).
Smaller allocations are held in Data Patterns (India) Ltd. (3.68%), Astra Microwave Products Ltd. (3.50%), Zen Technologies Ltd. (3.22%), and BEML Ltd. (3.02%). This indicates a strong focus on companies involved in defence manufacturing, aerospace, and related technologies.
Fund houses are showing growing interest in India’s defence sector with the launch of dedicated ETFs and index funds. Two defence-focused ETFs—Groww Nifty India Defence ETF (GROWWDEFNC) and Motilal Oswal Nifty India Defence ETF (MODEFENCE)—are now listed.
Additionally, domestic index funds like Aditya Birla Sun Life Nifty India Defence Index Fund and Motilal Oswal Nifty India Defence Index Fund offer investors passive exposure to the sector, reflecting increasing confidence in its long-term growth potential.
Written By Abhishek Das
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