India's Private Defence Sector Poised for Growth Amid Rising Domestic Demand

India's private defence sector is on the brink of significant growth with revenue set to increase by 16-18% in the 2025-26 fiscal year, as a result of sustained domestic demand and government policy support, as reported by Crisil Ratings. This growth trajectory follows an impressive 20% CAGR from 2022 to 2025.

The sector's expansion is aided by extensive investments in research, development, and capital expenditures, enhancing company capabilities and order acquisition. Profit margins are expected to stabilize, maintaining operating margins between 18-19%, with equity infusions helping to sustain healthy balance sheets despite ongoing financial commitments.

While state-owned enterprises dominate India's defence landscape, private companies are gaining ground due to increased domestic procurement initiatives prompted by geopolitical tensions. This momentum attracts capital inflows through IPOs and private equity, facilitating growth in innovation and R&D. Order books could reach Rs 55,000 crore by fiscal end, driven by advances in electronics and aerospace sectors.

(With inputs from agencies.)