India defence capex to reach Rs 2.8 tn by FY30

According to a report by Kotak Institutional Equities, India's defence capital expenditure is projected to grow at an 11% CAGR over FY2026-30 to reach Rs 2.8 trillion by FY2030. This growth is driven by policy measures such as positive indigenisation lists and the Defence Acquisition Procedure 2020, which mandate over 50% indigenous content. Indian defence exports have grown 50-fold over the past decade, reaching Rs 38,400 crore in FY26, with a target of Rs 500 billion by FY2029. The US remains the largest export destination, while Europe and Armenia are emerging markets. The report also highlights that India is expected to spend $25-30 billion on drones and $4-5 billion on counter-drone systems over the next decade. Global military spending surged to $2.7 trillion in CY24, with SIPRI forecasting $6.6 trillion by 2035. India ranks as the fifth-largest military spender at $84 billion. Acceptance of Necessity approvals have surged ~10X over FY2021-26, implying Rs 6.5-7 trillion in new orders during FY2027-29. Domestic procurement share rose from 54% in FY19 to over 70%. Indian defence companies trade at a 50% valuation premium over global peers, with a 50X forward P/E versus 28X globally, reflecting a projected revenue CAGR of 26% compared to the global average of 11%.