India’s Defence Sector to Witness 15-17% Revenue Growth
India’s defence manufacturing sector is expected to see a 15-17% revenue growth in FY2025-26. This growth is driven by a strong order book and government support for domestic procurement. The industry’s order book to operating income ratio stands at 4.4 times, indicating solid revenue visibility.
Key Highlights:
- Revenue Growth: 15-17% growth projected for FY2025-26, fueled by robust order book and government focus on domestic procurement
- Operating Margins: Expected to remain strong at 25-27% in FY26, supported by scale, localisation, and value-accretive production
- Domestic Procurement: Rose from 61% in FY2017 to 75% in FY2025, driven by the Atmanirbhar Bharat initiative
- Defence Exports: Surged 15-fold, registering a CAGR of 41% to reach Rs 23,622 crore between FY2017 and FY2025
- Capital Spending: Defence budget’s capital outlay grew at a CAGR of 8.29% over the past five years, reaching Rs 1.92 lakh crore in FY26 Budget Estimate
Challenges:
- Working capital management remains a challenge, particularly for private sector players in the defence space
